Bringing free trade has always been an arduous task, no matter where. Negotiations on the African Continental Free Trade Agreement (AfCFTA) have been the same as well. This agreement was jump-started in 2015 after an agreement was reached by the African heads of Government in 2012.
By March 2018, 44 out of 55 targeted member states signed the AfCFTA, bringing together an approximate market size of 1.27 billion people with an aggregated GDP of US$2.1 trillion; aggregated GDP at Purchasing Power Parity (PPP) is US$6.7 trillion. The core aim of this agreement is to boost Intra-Africa trade, stir development, and enhance the continents global competitiveness. As stated during a seminar at KDI School, led by the African Union Commissioner for Trade and Industry, Mr. MUCHANGA, Albert M., history has shown that larger markets hold a comparative advantage competing globally. Hence, it is time that Africa joins forces to compete not only within its borders but internationally as well.
So far, four legal agreements and protocols were successfully signed in Rwanda on March 21st, 2018. These include Agreement Establishing the AfCFTA, Protocol on Trade in Goods, Protocol on Trade in Services, Protocol Rules, and Procedures on the Settlement of Disputes. On the other hand, Protocol on Investment, Protocol on Competition, and Protocol on Intellectual Property Rights are still at their initial phase of negotiation, as of 2018. Full closures are predicted to be at 2020.
With this initiative, member states aim to establish trade policies limiting trade restrictions within Africa whilst simultaneously stimulating productive capacities, trade-related infrastructures and market integration among other development driven objectives.
Despite this forward-looking initiative by the African leaders, there are still some challenges which need addressing for the successful transition into one unified free-trade zone. To begin with, the African continent currently has 14 regional economic communities which over the years has resulted in overlapping mandates, duplication of work, and dissipation of resources. However, only eight of the active 14 economic communities are recognized by the African Union, namely: COMESA, CEN-SAD, ECCAS, ECOWAS, EAC, IGAD, SADC and AMU. Therefore, the continued existence of these economic communities is now in question with the establishment of AfCFTA. Another pressing challenge of the AfCFTA currently lays on how best to transition and help individuals who fear the unknown shift into this new system and reassure its benefits whilst diminishing the self-installed threat perception of declining fiscal revenues with the introduction of tariff restrictions. Lastly, what are the suggestions in terms of mode of exchange, precisely currency for trade, when, at present, there is no unifying currency for the entire continent?
Nevertheless, despite skeptics’ reluctance as to whether this is the most adequate time for a free-trade zone in Africa, considering other pressing concerns prevailing in the African continent at the moment, Mr. MUCHANGA, Albert M. concludes his seminar by stressing that there is no perfect time for change, yet there is the need to start somewhere, at some point and that is now for Africa. On that note, he hopes that KDI School will accept the invitation to partake in future Pan – African conferences and workshops to share Koreas’ Development Research and Management with Africa
By Stella CONSELHO (2018 MDP, Mozambique)