AfCFTA: Trade as an engine to build the Africa We Want

In 2013, the African Union (AU) captured their 50 year development plan in 2063 Agenda under the theme "The Africa We Want". The vision:??An integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international?arena.

There are 15 flagship projects; establishing a continental customs union that uses trade as an?engine of growth and sustainable development is number 3 on the list.?

Africa currently accounts for only about 2% of global trade and 17% intra-African trade.?Africa's biggest trading partner is China. Intra-African trade is low for a myriad of reasons including countries protecting themselves from regional competition, lack of infrastructure, high cost of doing business (including high trade tariffs).?Addressing the African Heads of State earlier this week at #IDA21, President Museveni?complained about the continued dependency on raw materials and the bias for importation?"Money is available for import to become more dependent". He has banned the exportation of unprocessed minerals from Uganda and the subsequent growth of local refineries. The global revenue of coffee is approximately $460 billion dollars; coffee producing countries in Africa combined receives only a fraction of this. This, in his words, is a type of modern slavery. We need to be more focused on export promotion, growing our economies and creating jobs.

In a bid to bolster intra-African trade, the African Union Agenda 2063 aimed at establishing a single market on the continent's 1.3 billion population, in the same way that European Union has a single market. This is the?African Continental Free Trade Area (abbreviated to AfCFTA). days ago, President Museveni complained about the lack of strategic 460 billion coffee

The African Continental Free Trade Area (AfCFTA) Agreement is the legal document that establishes the continental free trade area. The Agreement was signed in March 2018 in Kigali, Rwanda. At the ceremony, President Kagame (in his capacity as the then AU Chairperson) noted: “This is not just a signing ceremony. Today’s deliberations are critically important as we chart the next steps on our journey towards the Africa we want.”

The Agreement entered into force on 30 May 2019. Following a transition period of almost 2 years, trading under the Agreement commenced in January 2021. The lofty ambitions of the Agreement include increasing the income of the continent by $470 billion by 2025 and lifting 30 million Africans out of poverty.??According to the AU, the African economy should expand to $29 trillion by 2050 should the Agreement be properly implemented.

Steering the AfCFTA ship requires great patience and realistically, it will take a while for all 55 countries to really take advantage of what the Agreement has to offer. This is also because so much of the detail is yet to be worked out in the Protocols and their corresponding Annexes.?

In October, 2022, 8 countries agreed to expedited their trade engagement under?the AfCFTA Guided Trade Initiative launched in Ghana. Essentially, these are the AfCFTA guinea pigs; piloting what it truly means to progressively remove tariff barriers, change mindsets around protectionism and put the theory of AfCFTA into practice.?These countries, which represent Africa's 5 regions, are: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia. A number of commodities were agreed and the first-ever shipments under AfCFTA of coffee and batteries went from Rwanda and?Kenya respectively to Ghana.?

The Agreement (Article 8) sets out a framework and introduces the concept of Protocols.?“Protocols” are instruments attached to the Agreement, that form an integral part of the Agreement. There are 8 Protocols.

The first three protocols Trade in Goods, Trade in Services and Dispute Resolution were established when the Agreement entered into force in May 2021. They form the crux of the Agreement - namely, how do we freely move goods and services and what do we do if we end up in a dispute. These are referred to as Phase I Protocols.?

During the 36th African Union Summit in Addis Ababa, Ethiopia (February 2023), the AU Assembly of Heads of State and Government adopted three additional Protocols under Phase II, that further deepened integration across three areas that are critical for doing business: Investment, Competition and Intellectual Property. These Protocols show a level of intentionality in growing successful businesses in a single market and attracting continental and non-African investors. There is clear emphasis on the free movement of capital and ensuring that investments can thrive because creativity and innovation are safeguarded through the promotion, protection and enforcement of intellectual property rights and anti-competitive practices are regulated.

The political leaders planned for a further Phase III to cover negotiations on e-commerce, but this?was fast-tracked to Phase II as the leaders recognised the unique opportunity for Member States to leverage the digital economy to accelerate intra-African trade. In February 2024, two Protocols were adopted: the Protocol on?Women and Youth and the Digital Trade Protocol. The Protocols aim to?enhance the involvement of women and youth within the AfCFTA, recognising the specific challenges faced by these groups and promoting digital trade on the continent through harmonised regulations respectively.

Each Protocol has a number of Annexes that have to be negotiated and drafted.?

In addition, each country has to implement the Agreement and Protocols through domestic laws and regulations and build capacity in local institutions to champion them and then?confirm their commitment by summiting instruments of ratification. The Agreement itself needs to be ratified as well as all of the Protocols. 55 times.??

AfCFTA is like an onion with all its layers.?

At the signing ceremony in 2018, Mr. Faki, then Chairperson of the AU Commission, quoted an address made to the Ghanaian National Assembly in 1965 by Ghana’s first president, Kwame Nkrumah:?

“The task ahead is great indeed, and heavy is the responsibility; and yet it is a noble and glorious challenge – a challenge which calls for the courage to dream, the courage to believe, the courage to dare, the courage to do, the courage to envision, the courage to fight, the courage to work, the courage to achieve – to achieve the highest excellencies and the fullest greatness of man.”

Those words remain true today. The task is indeed great and will require courage as well as intentionally and strategic partnerships to achieve the vision and the Africa We Want and, frankly, deserve.?

#AU #AfricaWeWant #trade #Rwanda #Leadership #Protocols #AfCFTA?