JOHANNESBURG, Dec 20, 2020 (BSS/AFP) – Touted as the world’s largest
single market in terms of the number of member nations, Africa’s ambitious
blueprint for free trade kicks into gear on January 1, bringing together more
than 50 economies from Algeria to South Africa.
The African Continental Free Trade Area (AfCFTA) was supposed to become
technically operational months ago, but the launch was delayed by
complications blamed on the coronavirus pandemic and the slow pace of
negotiations.
But disappointment lies in wait to anyone hoping that African trade will
enjoy a barrier-free Big Bang come New Year’s Day.
Jakkie Cilliers, head of African Futures and Innovation at the Pretoria-
based Institute for Security Studies, says it will be a long way before
tariffs are scrapped, red tape is slashed and much-trumpeted gains are
realised. A brainchild of the African Union, AfCFTA has been signed and
ratified by all 55 AU states except Eritrea since its ceremonial birth in
July 2019 after 17 years of haggling.
Internal trade within the continent of 1.2 billion people currently stands
at a meagre 16 percent, while 65 percent of their commerce is with European
countries.
AfCFTA’s plan is to boost intra-African trade by 60 percent by 2034 by
eliminating almost all tariffs, creating an economic bloc of $3.4 trillion.
If fully implemented, the AfCFTA will lift 30 million Africans out of
extreme poverty and 70 million from moderate poverty, according to World Bank
estimates.
But in an interview with AFP, Cilliers cautioned about the grinding task
of scrapping duties and other impediments to trade.
This means it will be a long time before tangible results are felt in the
world’s poorest continent, he said.
“There are considerable tariff requirements that still need to be agreed
on between the various countries,” Cilliers said.
“The intention is that the agreement be fully operational in actual effect
by 2034 when something like 97 percent of all tariffs will be eliminated.”
Nigeria, Africa’s largest economy, only deposited its ratification
instrument on December 5 after having signed it a few weeks earlier.
– Market integration –
Integrating over 50 markets that are at very different levels of
development will be daunting, Cilliers said.
“There is still a significant amount of negotiations that have to occur,”
he warned. “Trade negotiations are incredibly complex because every
individual tariff line needs to be negotiated and agreed upon.”
Another problem “is that the relationship between the AfCFTA and many of
the existing” eight regional blocs needs to be sorted out.
Other issues to be thrashed out are how to dovetail existing or future
trade agreements between Africa or individual African countries with Europe,
China and the United States.
Non-tariff and political barriers could prove tricky.
“Corruption of government officials, slow processing of documentation
around the borders… and lack of capacity will remain a challenge going
forward in implementing the continental free trade area and making it real,”
said Cilliers.
Wamkele Mene, AfCFTA’s secretary general, has said Africa “continues to be
trapped in a colonial economic model” and has to “aggressively” implement the
new deal.
Africa accounts for only three percent of the global economy, and it being
parcelled into 55 different economies has been a “huge inhibitor” to rapid
continental economic growth, said Cilliers.
“The whole intention of the continental feature idea is to build regional
value chains and to allow Africans not only to trade commodities but also to
trade more value-added goods,” he said.
“If Africa does not proceed down this road it will increasingly become
irrelevant.”