By Quinlyn Manfull
On March 21, 2018 at a summit in Kigali, Rwanda, 44 of the 55 African Union (AU) member states signed an agreement that will set up a free trade area through the continent of Africa. With the intent of improving regional integration, boosting economic growth across the continent and increasing intra-African trade, the deal will create the African Continental Free Trade Area (AfCFTA).
This summit was part of Agenda 2063 — a strategic framework for the socioeconomic development and integration of the African continent which builds on, and seeks to accelerate the implementation of past and existing continental initiatives for growth and sustainable development. 27 member states have also already signed a commitment for the free movement of persons. Development of the AfCFTA began in January 2012 and has now been through eight rounds of negotiations to reach the agreement that is currently held.
The agreement creates a single continental market for goods and services as well as a customs union with free movement of capital and business travels. Part of the AfCFTA commits countries to remove tariffs on 90 percent of goods, slowing phasing in the other 10 percent over time.
The AfCTA could potentially bring more than 1.2 billion people together into a common market with a combined GDP of $2.2 trillion; a 55 nation bloc — if all states sign on — would be the largest in the world. According to the UN Economic Commission on Africa, intra-African trade is likely to increase by 52.3 percent and will double upon the further removal of non-tariff barriers — a major goal of Agenda 2063 and the AfCFTA.
Promoting intra-African trade aids in fostering a more competitive manufacturing sector in order to generate and bolster economic diversification. Countries are hoping that the removal of tariffs will create a continental market that allows corporations small and large to benefit from the newly crafted economies of scale. By moving towards intra-African trade, countries across the continent are able to spend more domestic capital on industrial development. The UN Economic Commission on Africa has cited that African nations with the largest manufacturing bases (South Africa, Kenya and Egypt) stand the most to gain from this plan.
The plan is not universally supported. Currently, there are 10 countries not signed on. Nigeria, one of the strongest economies in the continent, pulled out of the signing ceremony then gave a statement positing that they needed “to allow time for broader consultations,” with unions and businesses. The Nigeria Labour Congress had previously warned the Nigerian president Muhammadu Buhari to not sign the agreement as it was a “renewed, extremely dangerous and radioactive neoliberal policy initiative.”
Other critiques of the agreement point to general anti-free trade arguments including potential job losses and harms to the development of domestic manufacturing capabilities that occur when countries are not allowed to maintain their infant industries, despite analysis from multiple UN Commissions which predict the opposite. The non-universality of the signing of the agreement as well as only 30 nations signing the Free Movement Protocol does threaten the success of a single common market.
African leaders have agreed to have the AfCFTA come into effect within 18 months with at least 22 countries formally ratifying the agreement. In the meantime, there is still time for debate and creation of negotiations on competition, intellectual property rights, investments and so on within signatory nations.