AFRICAN FREE TRADE VISION SAUNTERS AMIDST CORONA VURUS PANDEMIC.
The African Continental free Trade Agreement which was supposed to be operational by 2020, still hangs in balance due to delays caused by the Covid-19 outbreak. A historic deal to remove all tariff barriers within the continent is being braked by the coronavirus pandemic and a thicket of negotiating problems. The African Continental Free Trade Agreement (AfCFTA) was formally launched just over a year ago in a blaze of optimism. The accord—styled as the biggest free-trade accord in the world in terms of population—gathers 54 out of 55 African countries, with Eritrea the only holdout. It aims to phase out all tariffs on commerce on the continent of 1.2 billion people, a goal that backers say could give trade a mega-jolt as only 15 percent of trade by African nations is with continental neighbours compared to 70 percent with Europe. Forty-two countries out of 55 in Africa are either in full or partial lockdown calling for a new date in 2021 has been proposed by ambassadors at the Africa Union's headquarters in Addis Ababa. The recommendation has yet to be adopted by heads of state.
It should be noted that talks on the AfCFTA got underway in 2002 and inched towards an agreement that officially began life on May 30, 2019 after it crossed a threshold of ratification by at least 22 countries. That number has edged up to 28, and includes economic heavyweights such as South Africa and Egypt, and middleweights including Morocco, Kenya and Ivory Coast. But Nigeria—the most populous country in Africa, with around 200 million people—still has not ratified, nor have Algeria or energy exporter Angola. In a shock move last August, Nigeria dramatically closed off its borders with neighbours, a move that it said aimed at preventing smuggling. But the step was carried out unilaterally and breached free-trade agreements among members of the 15-member Economic Community of West African States (ECOWAS).
This is seen by observers as a worrying development from a country that was an enthusiastic backer at the dawn of the AfCFTA process, the effort to breathe life into the pact is a huge negotiation task. Among the big questions that have to be negotiated are the rules of origin—the identification of the contents of a product that are the nuts and bolts of any free-trade accord—and detailed timetables for scaling back tariffs. Then there is the task of figuring out how AfCFTA should dovetail with eight existing regional organisations in Africa, such as ECOWAS and the six-nation East African Community (EAC) with their intra-regional obligations. According to the International MonetaryFund (IMF), this would encourage intra-African trade to rise by around 16 percent—an additional $16 billion (14.25 billion euros)—annually. Amidst so much optimism, there lies worries that AfCFTA will have a destructive impact on small manufacturers and family farms if borders are fully opened to imports. With such fears in mind, a more progressive phase-out is being envisaged for less developed economies. Tariffs on intra-African trade average 6.1 percent more than on exports to non-African countries. Achieving continental trade dividends of such magnitude, will not come cheap. It will require bold and deliberate investment in connectivity knitted together by motorways, railways, flight routes, energy pipelines, telecom networks and so on. It remains work in progress for Africa to create such crucial links.