The AfCFTA: promise for a globally competitive continent and Africa’s development

KEYWORDS::

• African Continental Free Trade Area
• socioeconomic development
• regional integration
• intra-African trade
• African Union

Introduction

The African Continental Free Trade Area was established within the context of a changing global economic order – one marked by increasing flows of capital, labour, goods and services after the end of World War II. The idea of an open international economic system is based on several assumptions. First is the understanding that free trade between countries promotes peace and international cooperation. The painful lessons of World War II and the attendant destruction of humanity also served to guide global leaders on the need to ensure global peace and security by integrating the world economy through trade (Gilpin 2001; Spero and Hart 2010).

Second, is the triumph of free market and capitalist ideology over communism in ways that privilege markets as the most efficient means for resource allocation (Fukuyama 1992). Harvey (2007) provides a historical excursion into how conservative political and economic elites in countries such as the USA, Britain and Germany launched a systematic attack on the Keynesian economic principles of large government spending, powerful labour unions, the welfare state and state regulation of the market of the 1950s to 1970s. The Mont Pellerin Society at the University of Chicago became the intellectual powerhouse of neoliberal and pro-market ideas, which Von Hayes and other scholars had championed since the 1930s. The combination of political and intellectual resources fostered the hegemony of neoliberal ideas over communism and socialist ideologies. Amongst the neoliberal ideas thus propagated was the notion of free trade. Globalisation in this respect implies a general worldwide move towards a free market approach in how economies are regulated and managed. It entails the lowering of barriers to trade between countries.

Third, towards the end of the twentieth century, the argument was increasingly made that the aim of globalisation was to establish ‘a world without poverty’. The World Bank Group, which is among the international organisations that Stiglitz (2002) calls the governors of globalisation, states its mission thus: ‘Our Dream is a World Free of Poverty’ (World Bank 2019). The path to fulfilling this dream includes a set of market and liberal policies, financial products, instruments and programmes, which the World Bank prescribes to its over 145 client countries (ibid). The organisation reports that it has significantly contributed to the most important progress in poverty reduction in this way over the past three decades of globalisation (World Bank 2018). Africa, or most of its respective countries, is a major client of the World Bank.

Like the other developing regions of the world, most of Africa faced economic problems during the oil crisis of the 1970s. Conditions worsened in the 1980s and caused those countries to seek the assistance of international financial institutions such as the World Bank and the International Monetary Fund (IMF). The international financial institutions in turn required the countries that sought their assistance to liberalise trade as part of the conditionalities for securing the assistance (Stiglitz 2002). With regard to trade, most African countries reduced tariffs and eliminated some non-tariff barriers from the 1980s onwards, especially on imports from other parts of the world. On the export side, African countries have exported more to countries outside the continent – mostly Europe and the USA – than among themselves since colonial times. Intra-African trade seems to have always been low and only increased to about 14 percent (ECA, 2017) in the early twenty-first century. Apart from the low volumes of intra-African trade, exports to countries and regions outside the continent largely consist of commodities and unprocessed minerals and metals.

A globally competitive Africa

The African Continental Free Trade Area (AfCFTA) was established as a strategy for African countries to collectively change the dynamics in global trade and in the structural composition of African economies so that they can economically engage the global economy. Theoretically, the AfCFTA is based on the idea of free trade, which is anchored on removal of tariffs and non-tariff barriers to trade between member states of the African Union (AU). The AfCFTA is also focused on the diversification of African economies through industrialisation, the promotion of services sectors and innovation. The AfCFTA is part of the AU’s long-term agenda of integrating Africa and achieving development. It is a critical part of the integration agenda of the AU. The Abuja Treaty for the Establishment of the African Economic Community of 1991 specifies the sequence through which Africa will create an African Economic Community (AEC) over a period of 34 years. Article 6 of the Abuja Treaty specifies that ‘the Community shall be established gradually in (6) stages of variable duration over a transitional period not exceeding thirty-four (34) years.’

Although the continent missed the initial deadline of establishing the AEC in 2000, the AU worked assiduously to ensure that a continental deal to begin the process was signed in March 2018, with 44 countries agreeing then to the overall framework of the AfCFTA. By 28 April 2019, 22 countries had ratified the agreement, thus reaching the required threshold of ratifications to enforce it. The AfCFTA subsequently entered into force a month later, on 30 May 2019. An Extraordinary Summit of the AU Heads of State and Government held on 7–8 July 2019 in Niamey, Niger, operationalised the AfCFTA (ECA 2019) and trading under the agreement formally began on 1 January 2021. This was approximately six months after the start that had initially been planned for July 2020 but was disrupted by Covid-19. As at August 2023, 47 of the 54 signatories (87%) had deposited their instruments of AfCFTA ratification (ordered by date) (Tralac 2023).

Ex-ante studies conducted by the United Nations Economic Commission for Africa (ECA 2017) and the United Nations Conference on Trade and Development (UNCTAD 2016) point to the huge potential in the AfCFTA to boost intra-Africa trade and stimulate the development capabilities of AU member countries. Although intra-Africa trade in manufactured products is said to be more diversified and higher than exports to other regions of the world, more room exists to achieve higher volumes of trade in ways that should lead to structural transformation and socio-economic development in Africa (Sommer and Luke 2018).

The AfCFTA and global integration outside of Africa

There is also the issue of Africa’s trade engagements with the rest of the world. What is noteworthy in this regard are other processes and trade arrangements outside of Africa, that do not include Africa. Some include mega-regional trade agreements such as the Trans-Pacific Partnership (TPP) agreement that involves Australia, Canada, Japan, Mexico, the USA, and seven other countries in the Pacific Rim; the proposed Transatlantic Trade and Investment Partnership (TTIP) between the USA and the European Union (EU); and the proposed Regional Comprehensive Economic Partnership (RCEP) free trade area (FTA) between the Association of Southeast Asian Nations (ASEAN) member states and six countries in the Asia-Pacific that hold free trade agreements with ASEAN. The establishment of these economic and trade pacts pose a challenge to the trade position of individual African countries, which might have to (re)negotiate trade deals with the countries outside of Africa following the negotiated agreements that will be made under the mega-trade agreements. The AfCFTA, therefore, mitigates against the challenges and potential threats posed by the large trade deals outside of Africa and in which Africa is not a participant.

But Africa indeed participates in some mega-regional trade agreements outside the continent itself. A case in point is the EU-ACP (European Union-African Caribbean Pacific) economic partnership agreements (EPAs). EPAs represent an ‘upgrade’ on the preferential trade arrangements the EU has held since the 1960s with African, Caribbean and Pacific countries that are former colonies of some EU member states. The so-called upgrade was necessitated by World Trade Organisation (WTO) requirement for open trade agreements between parties to be non-discriminatory (towards countries that are not party to the agreements). The controversy, debates and contentious issues raised with regard to EPAs suggest that they too will impact, be affected by and have consequences for the efficacy and usefulness of the AfCFTA. A critical question that arises from this, relates to how the AfCFTA will be rolled out. There is also the question of its consequences for socio-economic development in view of EPAs and other emerging mega-regional trade agreements in the world to which Africa is not party.

The AfCFTA, socio-economic and development challenges in Africa

The AfCFTA has the broad objective of fostering socio-economic development in Africa through a more integrated African continent that has a diversified economy, including value adding export portfolios, manufacturing and industrialisation, services and free movement of people. The ECA, which has been a key player in this initiative, describes the overall objective of the AfCFTA in relation to the structural transformation and socio-economic development of Africa in this way:

When it is implemented, the AfCFTA is expected to generate a range of socio-economic development benefits through supporting trade creation, structural transformation, and poverty reduction, with far reaching implications for generating employment and raising incomes for African women as a particularly disadvantaged and marginalised group. A major part of its promise lies in its potential to create a large enough market to induce investment in manufacturing across the continent, both to substitute imports and, in the long term, to transform Africa into a manufacturing hub and a leading exporter of manufacturing products to the rest of the world. (ECA 2019, 1)

The AfCFTA is also set within broader continental and global development strategies encapsulated in the AU Agenda 2063 and the United Nations Sustainable Development Goals (SDGs) 2030. A casual reading of the objectives and high expectations that accompany how the AfCFTA can lead to its realisation could be misleading. This is so for various reasons. First, at national level, individual African countries face many supply side constraints that could limit the achievement of expected structural transformation objectives. Poor governance, which manifests in the misappropriation of state resources by political leaders and senior government officials and actors in the private sector, remains a sore point in many African countries. Corruption and illicit flows of finance rob most African countries of vital resources for development. Thus, the resources that are critical to the development of infrastructure for transport, communication, energy and training of qualified personnel end up being diverted to ends for which they are not purposed (Okonjo-Iweala 2012).

Secondly, supply side constraints exist such as a lack of well-linked trade routes like road and rail networks to connect Africa. Although different parts of the continent are witnessing the construction of roads and other physical infrastructure that can help to bridge these gaps, the gap between what is available and what is needed is so huge that it threatens to affect the deliverables of the AfCFTA. Other challenges relate to the capacity to develop African products that meet internationally acceptable standards. The AfCFTA prioritises exports of manufactured products. In order for those products to be accepted in the international market, they should meet international standards such as safety. This is especially so in the food export sectors. It remains to be seen how many countries in Africa can meet the various standard and phytosanitary standards that EU or even the USA require for them to import outside products.

Thirdly, there are costs associated with the implementation of the AfCFTA. Least Developed Countries (LDCs) and some developing countries in Africa heavily depend on import duties for revenue. Concerns remain on how to mitigate the costs associated with the loss in revenues from the removal of tariffs. Some consequences of tariff removal might include the loss of jobs, an inability to pay salaries to civil servants and reductions in social spending.

The fourth area of concern is the political will to actualise trade agreements. Stakeholders at the regional trade forum held in Nigeria on this issue from 2–3 November 2018 expressed concern that many previous trade agreements at regional level such as the Economic Community of West African States (ECOWAS) remain unimplemented. Scholars emphasise the consideration for narrow interests, as well as the concern over loss of power and privileges as responsible for delays in implementing agreements at regional levels on the continent since the 1970s (Adedeji 2012; Oloruntoba 2017;).

The fifth concern on the extent to which the AfCFTA can contribute to socio-economic transformation in Africa is the degree to which countries on the continent can use the agreement to negotiate more meaningfully with external partners. Divisions among Africans along Francophone, Anglophone and Lusophone colonial heritage hamper continental unity (see also, e.g., Adedeji 2012; Bach 2007). Geostrategic interests too, define relationships with external partners such as the EU, the UK after Brexit, the USA and China. While Pan-African solidarity may form the basis for the establishment of the AfCFTA, countries outside of Africa will relate with the continent based on the potential gains of their companies in accessing raw materials and markets for finished goods and services on the continent. Thus, a coherent strategy on the development concerns of African countries should be central to negotiations with third-party countries that wish to relate with Africa within the context of the AfCFTA.

Educated view of African integration and development

This special section of the Journal of Contemporary African Studies examines prospects and addresses some issues and challenges of integration in the AfCFTA. The special section is timely for Africa in as much as it is of global relevance, given the resurgence in regional trade agreements and doubts about an open international trade regime. The significance of the special section is also reflected in the fact that it brings together interdisciplinary perspectives on economic and non-economic, political and non-political and socio-economic and cultural issues that relate to and are relevant to regional trade agreements and development in Africa.

The few existing studies on the AfCFTA so far largely focus on its technical aspects. They do not go far enough in exploring the links between the regional trade agreements and socio-economic development and transformation in Africa. Neither do they dissect the AfCFTA to explore its potential and expose the socio-economic, political, security, legal, cultural and other essential dynamic aspects that define African realities, and the dimensions that should help define the mammoth and momentous task Africa faces in bringing such an ambitious undertaking to fruition.

Existing studies also fail to reflect the multidimensional and interdisciplinary components of the regional trade agreements and various geographical parts that should physically amalgamate Africa into a single trading and economic bloc. Knowledge production that relates to regional trade agreements is traditionally locked within individual and isolated disciplines including, Economics, Sociology, Political Science and International Relations.

But regional trade agreements have social, developmental and legal implications because they affect welfare, gender, the environment, cultural changes, human rights and stability in society. The articles in this special section represent a first attempt at a combination of academic endeavours and wholesale efforts to bring scientific and academic study to bear on the AfCFTA, prospects for Africa’s development and the understanding thereof that involve socio-economic and political cooperation on a continental scale. Samuel Ojo Oloruntoba, for instance, examines the broad question of the political economy imperative of the AfCFTA and how the trade agreement that established it can translate into structural transformation of African economies. Set within the continued dominance of the export of primary products, he argues that structural transformation, which connotes a fundamental shift from primary economic activities to value adding industrialisation and services is critical to achieving socio-economic development in Africa. The political economy dimension of Oloruntoba’s contribution explores the extent to which local and domestic forces can frustrate or enable the AfCFTA to help African countries achieve structural transformation and attain socio-economic development. Despite the euphoria that greeted the signing of the AfCFTA and its eventual ratification, Oloruntoba’s article highlights various challenges that may affect the realisation of the initiative’s core objectives. While many of these challenges such as a lack of political will and the absence of critical infrastructure are well discussed by stakeholders to this agreement, not much thought is given to the effects of other mega agreements such as the EU-ACP EPAs on the implementation of the AfCFTA. Oloruntoba discusses this extensively and recommends that it should be made part of next stages in negotiating Africa’s integration.

The articles by Ernest Toochi Aniche and Moorosi Leshoele, respectively, locate the AfCFTA within the broader regional integration agenda of the AU. Scholars argue that despite the challenges, regional integration has been high on the agenda of African leaders since independence (Adedeji 2012; Draper 2012; 2010). The AfCFTA is itself an outcome of the Abuja Treaty of 1991, which seeks to establish an African Economic Community. Anichie relates the AfCFTA to Pan-Africanism and shows how it provokes a feeling of déjà vu in the long process of fostering economic integration in Africa. After an examination of the divergent views on the prospects and challenges of the continental agreement, Anichie presents what he calls Afro-realism, which connotes the pragmatic view of the feasibility of the AfCFTA. He concludes that despite the agreement’s potential to translate into socio-economic development in Africa, there must be unabashed commitment among all stakeholders to ensure its full implementation.

While acknowledging that the AfCFTA could represent another milestone in the journey towards integration in Africa, Moorosi Leshoele’s concern is the lack of enthusiasm for political integration on the continent. He argues that economic integration without political integration will not achieve much socio-economic development. The question of political integration and freedom of movement of people has raged for long within discourses on regional integration. The neoliberal orientation of the regional integration approach in Africa probably plays a role in the ways in which consideration for market access takes precedence over other forms of integration such as cultural and political integration (see, e.g., Draper 2012; Gibb 2009; Oloruntoba 2017). Yet, Adedeji (2012) argues that former colonial masters such as Britain and France governed different parts of Africa in the form of integrated entities during colonial times. For example, Nigeria’s federation is owed to the merger of autonomous nations in the lower and upper River Niger by British imperial forces. These amalgamations were done in the interest of the colonisers, as the strategy helped to save money for the imperial country. The inability of African leaders to unite the disparate ethnic nationalities under a broad developmental ideology renders the continent a peripheral part of the world today. Moorosi Leshoele concludes that it is imperative for African leaders to prioritise the formation of a Union of African Governments and facilitate the free movement of people to ensure the success of the AfCFTA. The reality of the economic challenges is that African countries call to question the political unification of the continent. Adedeji (1970) provides an answer to this quagmire. He suggests that integration will be meaningful when each of the countries develops internal capacity to achieve development. The extent to which many of the micro-states on the continent can achieve development remains to be seen. However, the reality of geostrategic interests vis-à-vis other regions of the world and the shared experiences of Africans in an increasingly competitive global system make Leshoele’s argument for political integration very compelling.

As Oloruntoba argues in this special section, African leaders should counter both domestic and external forces that obfuscate the journey towards unity and integration of the continent to ensure the success of the AfCFTA. This requires unity of purpose and bold and purposive leadership, built on strategic diplomatic engagements that prioritise the development interests of the continent above any other consideration.

It also requires employing the underutilised and often marginalised potential in African women in general to develop Africa, particularly through the opportunities that the AfCFTA provides (Sommer and Nshimbi 2018).

A major criticism of regional integration in Africa is the adoption of the market integration approach, which is patterned after the European model of integration (Draper 2012; Gibb 2009;). In this context, the informal economy and cross border trade, which constitute a significant portion of economic activities in different parts of Africa, are generally excluded. Inocent Moyo’s contribution in this special section focuses on borders and informal trade within the context of the AfCFTA. While he commends the AfCFTA as a bold step towards the realisation of Africa’s integration agenda, he considers the omission of informal and cross-border trade from the general framework of the agreement as a major deficit in the drive towards achieving socio-economic development. Moyo notes that even though there is provision for free movement of people as well as goods and services under the AfCFTA, there is no emphasis or reference to informal cross-border traders. He concludes that policies geared toward integration in Africa should be formed in ways that ensure the inclusion of the voices of the ordinary people, especially those involved in informal cross-border trade.

On the whole, the articles in this special section give a balanced analysis of the AfCFTA. Unlike the usual general bashing of African integration that focuses on its failures, the articles in the section show that the scheme holds promise for development if inclusive and well implemented. This is in spite of all potential challenges and obstacles.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Samuel Ojo Oloruntoba

Samuel Ojo Oloruntoba is an Assistant Professor and Principal Investigator of the intercontinental research project on Indigenous Knowledge and Youth Empowerment in Africa. He is also an honorary Professor at the Thabo Mbeki African School of Public and International Affairs, University of South Africa, where he was previously an Associate Professor. He obtained a PhD in Political Science from the University of Lagos, Nigeria, where he was a tenured faculty member. He has taught various aspects of political thought, political economy of development in Africa, global economic relations, migration and Africa's diaspora and regional dynamics (with a focus on Africa), at various universities, including Carleton University, University of Pennsylvania, University of South Africa, and University of Lagos. He was previously a Visiting Scholar at the Program of African Studies, Northwestern University, Evanston and fellow of Brown International Advanced Research Institute, Brown University, Rhode Island, USA. Oloruntoba is the author, editor and co-editor of several books including Regionalism and Integration in Africa: EU-ACP Economic Partnership Agreements and Euro-Nigeria Relations (Palgrave, 2016) and co-editor with Toyin Falola of the Palgrave Handbook of Africa and the Changing Global Order (2022), among others. His research interests are in the politics of knowledge production, indigenous knowledge systems, political economy of development in Africa, global economic relations, regional Integration, migration, democracy and development, global governance of trade and finance, politics of natural resources governance, and EU-African Relations. Oloruntoba has won several awards and secured grants from local and international research institutions. He is also a member of the Africa Knowledge Network, Office of Special Adviser on Africa UN Under Secretary-General, United Nations, New York.

Christopher Changwe Nshimbi

Christopher Changwe Nshimbi is Director of the Centre for the Study of Governance Innovation (GovInn) and Associate Professor in the Department of Political Sciences at the University of Pretoria. He holds the South African Research Chairs Initiative (SARChI) Research Chair in the Political Economy of Migration in the Southern African Development Community (SADC) Region and researches regional integration, migration, borders, the informal economy and governance. Professor Nshimbi sits in on regional and international technical working groups on trade, labour, migration and water governance. He teaches Regional Integration and State Formation and Governance in Africa and supervises postgraduate research in the Department of Political Sciences of the University of Pretoria. He publishes op-eds in The Conversation and other media platforms.