Monday 08 Jul 2019

The AfCFTA: A Dream has become a Reality

The African Continental Free Trade Area is very strategic and of great significance as number one stepping stone to realize Agenda 2063. The whole Africa cheered on the night of 30 May 2019 when the Agreement establishing the biggest market in the world entered into force. It goes without saying that the AfCFTA will essentially be the world’s largest free trade area since the formation of the World Trade Organization (WTO) in terms of numbers of participating countries.

This important milestone of entry into force was achieved in unprecedented record period of one year, one month, one week and one day.  May 30, 2019 therefore marked a historic day for Africa alongside the 21st March 2019 when the Agreement was signed by Heads of State and Government in Kigali, Rwanda. 

While the glory of this historic achievement goes to the people of Africa and all African Union Member States, special recognition is attributed to the the leadership of H.E. Mr. Issoufou Mahamadou, President of the Republic of Niger and the Leader of the AfCFTA.

It took almost 50 years to understand that Africa needs a consolidated market. It took quite another long time to convince Africans that they need to speak with one voice and act in unison. In fact, for hundreds of years, Africans have pursued integration-in various forms and contexts-as an extension of the Pan-African Agenda which promotes the unity and solidarity of African peoples in recognition of not only their common history, but also their shared destiny.

Today, we are celebrating not only the common understanding of the continental vision but also the common agenda to achieve the same vision. It is no more a question of why or how. The question being answered in when.

Starting January 1st, 2020, AfCFTA State Parties will embark on a liberalisation process that will culminate in elimination of tariffs on 90% of the total number of traded products. This ambition will be complemented by an additional liberalisation of 7% of remaining products after 5 years.

A number of studies have shown that multiple memberships to regional economic communities are associated with large resource costs and binding financial constraints.  It makes it difficult to meet member states contributions and obligations to the various regional economic communities and that results in slow implementation of programmes, especially in programmes related to trade facilitation and trade and market integration. It also results in little translation of Regional Economic Community goals into national plans and budgets, an important interface between individual countries and the Regional Economic Communities. This calls for urgent rationalization of Regional Economic Communities and strong coordination mechanism with the AfCFTA.  

The implementation of the AfCFTA will not be free of challenges. The following challenges will emerge at the operational level. Since ttariff rates are not the same across AfCFTA State Parties, once the market starts trading, the issue of “trade deflection” will arise. The AfCFTA Secretariat will, in this regard, have to put in place a mechanism to monitor regularly the impact of trade deflection in the AfCFTA and propose solutions. Once we reach the stage of a Customs Union, the issue will not occur because there will be a Common External Tariff. 

The African Continental Free Trade Area, has been established on the 21st of March 2018, in Kigali-Rwanda, when Heads of States came together and signed the agreement and its protocols on Trade in goods, Trade in Services, and protocols on Rules of Procedures and on Settlement of Disputes. Through the AfCFTA Agreement African countries will be able to achieve some of the aspirations of the Agenda 2063 “The Africa We Want’’: A prosperous Africa based on inclusive growth and sustainable development. The main AfCFTA objective is to boost intra-African trade through Trade Policy, Trade Facilitation, Productive Capacity, Trade Related Infra-structure, Trade finance, Trade Information and Factor Market Integration.

The AfCFTA Agreement will lead to market liberalization in Africa where all barriers to trade will be eliminated giving numerous opportunities to investors and traders to better expose their products in the different parts of the continent and thus adding value to the economy. More importantly the AfCFTA will create job opportunities for young people, promote entrepreneurship, skills development, and women empowerment, and spur industrialization, infra-structure development and contribute to the African development.

By Prudence Sebahizi, Chief Technical Advisor on the AfCFTA and Head of Interim Secretariat