The African Continental Free Trade Agreement Ratification: What It Means for African Economies

In March 2018, the leaders of 44 African countries signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda, marking a historic milestone in the continent`s integration efforts. The agreement is designed to create a single market for goods and services across the continent, with the goal of boosting intra-African trade, economic growth, and job creation. Since then, several more countries have signed and ratified the agreement, bringing the total to 54 as of January 2021.

The AfCFTA is the largest free trade area in the world in terms of the number of participating countries, and it has the potential to transform the African economy. According to the United Nations Economic Commission for Africa (UNECA), the AfCFTA could increase intra-African trade by 52.3% by 2022 and double it by 2035. It could also add $450 billion to the continent`s GDP by 2035 and create millions of new jobs.

One of the key benefits of the AfCFTA is that it will eliminate tariffs on 90% of goods traded within the continent, making it easier and cheaper for African businesses to trade with each other. This will encourage the growth of regional value chains, where different countries specialize in different stages of production, leading to increased efficiency, productivity, and competitiveness. It will also reduce the dependence of African countries on exports to non-African countries, which have historically been vulnerable to external shocks such as commodity price fluctuations and trade barriers.

In addition to the elimination of tariffs, the AfCFTA also includes provisions on non-tariff barriers, such as customs procedures, rules of origin, technical standards, and sanitary and phytosanitary measures. These provisions are crucial for ensuring that trade flows smoothly and predictably, and that quality and safety standards are met. They will also help to address some of the regulatory fragmentation and duplication that have hindered intra-African trade in the past.

Another important aspect of the AfCFTA is that it includes a mechanism for resolving trade disputes between member states. This is critical for ensuring that the agreement is enforced and that countries are held accountable for their commitments. The dispute settlement mechanism is modeled after the World Trade Organization`s (WTO) system, but with some modifications to suit the African context.

However, there are also some challenges and risks associated with the AfCFTA. One of the concerns is that some countries may lose revenue from the elimination of tariffs, especially those that rely heavily on customs duties as a source of government revenue. To address this issue, the agreement includes provisions for compensation and support for affected countries, as well as for building the capacity of customs and tax authorities. Another challenge is the potential for unequal distribution of benefits among countries and sectors, especially if some countries are more competitive than others or if certain industries are more exposed to competition. To mitigate these risks, the AfCFTA includes provisions for special and differential treatment for least developed countries, as well as for sensitive sectors and products.

Overall, the AfCFTA represents a major step forward for African integration and economic development. It has the potential to unleash the continent`s vast economic potential, create jobs, reduce poverty, and enhance regional stability and cooperation. However, its success will depend on the commitment and collaboration of all member states, as well as on the effective implementation of its provisions. As the AfCFTA enters into force and begins to be implemented, it will be important to monitor its impact and address any challenges that arise along the way.