African Continental Free Trade Area; Eyes on Heads of State to open Boarders

By HICGI News Agency

Updated at 8:14 PM GMT on Tuesday, 5th January 21

Following the commencement of the African Continental Free Trade Area (AfCFTA) on 1st January 2021, citizens on the continent speaking to HICGI News Agency are demanding for their leaders to open boarders to propel the trade with free movement of people.  Founded in 2018, by the African Continental Free Trade Agreement among 54 of the 55 African Union nations. The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization. Accra, Ghana serves as the Secretariat of AfCFTA and was commissioned and handed over to the AU by the President of Ghana Nana Akufo-Addo on August 17, 2020 in Accra.

The agreement was brokered by the African Union (AU) and was signed on by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. The agreement initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022. The proposal was set to come into force 30 days after ratification by 22 of the signatory states. On April 2, 2019, The Gambia became the 22nd state to ratify the agreement, and on April 29 the Saharawi Republic made the 22nd deposit of instruments of ratification; the agreement went into force on May 30 and entered its operational phase following a summit on July 7, 2019.

Advert

The general objectives of the agreement are to:

  • create a single market, deepening the economic integration of the continent
  • establish a liberalised market through multiple rounds of negotiations
  • aid the movement of capital and people, facilitating investment
  • move towards the establishment of a future continental customs union
  • achieve sustainable and inclusive socio-economic development, gender equality and structural transformations within member states
  • enhance competitiveness of member states within Africa and in the global market
  • encourage industrial development through diversification and regional value chain development, agricultural development and food security
  • resolve challenges of multiple and overlapping memberships

Background

In 1963, the Organization of African Unity (OAU) was founded by the independent states of Africa. The OAU aimed to promote cooperation between African states. The 1980 Lagos Plan of Action was adopted by the organization. The plan suggested Africa should minimize reliance upon the West by promoting intra-African trade. This began as the creation of a number of regional cooperation organizations in the different regions of Africa, such as the Southern African Development Coordination Conference. Eventually this led to the Abuja Treaty in 1991, which created the African Economic Community, an organization that promoted the development of free trade areas, customs unions, an African Central Bank, and an African common currency union.

Advert https://www.kebinternationalgroup.com/apps/blog/entries/show/49685717-genuine-land-for-sale-in-uganda-30-areas

In 2002, the OAU was succeeded by the African Union (AU), which had as one of its goals to accelerate the “economic integration of the continent”. A second goal was to “coordinate and harmonize the policies between the existing and future Regional Economic Communities for the gradual attainment of the objectives of the Union.”

Negotiations

At the 2012 African Union summit in Addis Ababa, leaders agreed to create a new Continental Free Trade Area by 2017. At the 2015 AU summit in Johannesburg, the summit agreed to commence negotiations. This began a series of ten negotiating sessions which took place over the next three years.

The first negotiation forum was held in February 2016 and held eight meetings until the Summit in March 2018 in Kigali. From February 2017 on the technical working groups held four meetings, where technical issues were discussed and implemented in the draft. On March 8–9, 2018 the African Union Ministers of Trade approved the draft.

2018 Kigali Summit

In March 2018, at the 10th Extraordinary Session of the African Union on AfCFTA, three separate agreements were signed: the African Continental Free Trade Agreement, the Kigali Declaration; and the Protocol on Free Movement of Persons. The Protocol on Free Movement of Persons seeks to establish a visa-free zone within the AfCFTA countries, and support the creation of the African Union Passport. At the summit in Kigali on 21 March 2018, 44 countries signed the AfCFTA, 47 signed the Kigali Declaration, and 30 signed the Protocol on Free Movement of People. While a success, there were two notable holdouts: Nigeria and South Africa, the two largest economies in Africa.

African leaders pose for a group photograph as they meet to sign a free trade deal that would create a liberalized market for goods and services across the continent, in Kigali, Rwanda March 21, 2018. REUTERS/Jean Bizimana NO RESALES. NO ARCHIVES. – RC1CA93F2E10

One complicating factor in the negotiations was that Africa had already been divided into eight separate free trade areas and/or customs unions, each with different regulations. These regional bodies will continue to exist; the African Continental Free Trade Agreement initially seeks to reduce trade barriers between the different pillars of the African Economic Community, and eventually use these regional organizations as building blocks for the ultimate goal of an Africa-wide customs union.

CountrySigned ByafCFTA Consolidated Text (signature)Kigali DeclarationFree Movement Protocol
 AlgeriaPrime Minister Ahmed OuyahiaYesYesNo
 AngolaPresident João LourençoYesYesYes
 Central African RepublicPresident Faustin Archange TouadéraYesYesYes
 ChadPresident Idriss DébyYesYesYes
 ComorosPresident Azali AssoumaniYesYesYes
 DjiboutiPresident Ismaïl Omar GuellehYesYesNo
 Equatorial GuineaPrime Minister Francisco Pascual Obama AsueYesYesYes
 EswatiniPrime Minister Barnabas Sibusiso DlaminiYesYesNo
 GabonPresident Ali Bongo OndimbaYesYesYes
 GambiaPresident Adama BarrowYesYesYes
 GhanaPresident Nana Akufo-AddoYesYesYes
 Ivory CoastVice President Daniel Kablan DuncanYesNoNo
 KenyaPresident Uhuru KenyattaYesYesYes
 LesothoPrime Minister Tom ThabaneNoYesYes
 MauritaniaPresident Mohamed Ould Abdel AzizYesYesYes
 MoroccoPrime Minister Saadeddine OthmaniYesNoNo
 MozambiquePresident Filipe NyusiYesYesYes
 NigerPresident Mahamadou IssoufouYesYesYes
 Republic of the CongoPresident Denis Sassou NguessoYesYesYes
 RwandaPresident Paul KagameYesYesYes
 Sahrawi Arab Democratic RepublicPresident Brahim GhaliYesYesNo
 SenegalPresident Macky SallYesYesYes
 SeychellesVice President Vincent MeritonYesYesNo
 South AfricaPresident Cyril RamaphosaNoYesNo
 SudanPrime Minister Abdalla HamdokYesYesYes
 TanzaniaPrime Minister Kassim MajaliwaNoYesNo
 UgandaPresident Yoweri MuseveniYesYesYes
 ZimbabwePresident Emmerson MnangagwaYesYesNo

Drafting of further protocols

Negotiations continued in 2018 with Phase II, including policies of investment, competition and intellectual property rights. In January 2020, AU Assembly negotiations are envisaged to be concluded. A draft is expected for the January 2020 AU Assembly.

Institutions

The following institutions were established to facilitate the implementation of the free trade area. As a result of Phase II negotiations more committees may be established via protocols.

The AfCFTA Secretariat will be responsible for coordinating the implementation of the agreement and shall be an autonomous body within the AU system. Though it will have independent legal personality, it shall work closely with the AU Commission and receive its budget from the AU. The Council of Ministers responsible for trade will decide on the location of the headquarter, structure, role and responsibilities. The Assembly of the African Union Heads of State and Government is the highest decision-making body. It is likely to meet during the AU Summits. The Council of Ministers Responsible for Trade provides strategic trade policy oversight and ensures effective implementation and enforcement of the AfCFTA Agreement.

Table 1. Bilateral Ethiopian/Kenyan trade, 2015-2019 (millions USD and %)

Several committees have been established, for trade in goods, trade in services, on rules of origin, trade remedies, non-tariff barriers, technical barriers to trade and on sanitary and phytosanitary measures. Dispute resolution rules and procedures are still being negotiated, but will presumably include designation of a dispute resolution body. The Committee of Senior Trade Officials implements the Council’s decisions. The Committee is responsible for the development of programs and action plans for the implementation of the AfCFTA Agreement.

Implementation

The AfCFTA is set to be implemented in phases, and some of the future phases still under negotiation.

Advert

At the Kigali summit, areas of agreement were found on trade protocols, dispute settlement procedures, customs cooperation, trade facilitation, and rules of origin. This was part of Phase I of the agreement, which covers goods and services liberalization. There was also agreement to reduce tariffs on 90% of all goods. Each nation is permitted to exclude 3% of goods from this agreement.

The 12th Extraordinary Session of the African Union on AfCFTA was called to launch the new agreement into its operational phase, which was hosted in Niamey on 7 July 2019.

At its launch, five operational instruments that will govern the AfCFTA were activated: “the rules of origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payment system; and the African Trade Observatory.”

Some Phase One issues that remain to be negotiated include the schedule of tariff concessions and other specific commitments. Negotiations are also underway to see which city will host the AfCFTA.

Negotiations for Phase II began in February 2019. These negotiations will cover protocols for competition, intellectual property, and investment.

After months of delay because of the COVID-19 pandemic in Africa, the AfCFTA officially but largely symbolically launched on January 1, 2021.

Membership

As of July 2019, 54 of the 55 African Union states had signed the agreement, with Eritrea the only country not signing the agreement. Of these member states 27 have deposited their instrument of ratification.

After the Kigali summit, more signatures were added to the AfCFTA. At the African Union summit in Nouakchott on 1 July 2018, five more nations joined the agreement, including South Africa. Kenya and Ghana were the first nations to ratify the agreement, depositing their ratifications on 10 May 2018. Of the signatories, 22 needed to ratify the agreement for it to come into effect, and this occurred on 29 April 2019 when both Sierra Leone and the Saharawi Arab Democratic Republic ratified the agreement. As a result, the agreement came into force 30 days later on 30 May 2019; at this point, only Benin, Nigeria, and Eritrea had not signed. Outstanding issues like the trade concession agreements and rules of origin remain under negotiation.

Eritrea was not part of the initial agreement due to an ongoing state of war, but the 2018 peace agreement between Ethiopia and Eritrea ended the conflict and ended the barrier to Eritrean participation in the free trade agreement. The unrecognized state of Somaliland was not a party to the discussions related to the creation of the agreement.

At this summit, Benin and Nigeria signed the agreement, leaving Eritrea as the only African state not a part of this agreement; Eritrea has since asked to join the agreement. Gabon and Equatorial Guinea also deposited their ratifications at this summit. At the date of the launch, there were 27 states who had ratified the agreement.

South Africa, Sierra Leone, Namibia, Lesotho and Burundi have since signed the AfCFTA during the 31st African Union Summit in Nouakchott. As of July 2019, 54 states have signed the agreement.

Nigerian opposition

Nigeria was one of the last nations to sign the agreement. At 200 million people, Nigeria is Africa’s most populous country and has about the population of the second and third most-populous countries, Ethiopia and Egypt, combined, each of which have a population around 98 million. With a nominal GDP of US$376 billion, or around 17% of Africa’s GDP, it is just ahead of South Africa, which accounts for 16% of Africa’s economy. Because Nigeria is such a significant country in terms of its population and its economy, its absence at the initial signing of the agreement was particularly conspicuous. South African President Cyril Ramaphosa underscored that in comments on 12 July 2018 and commented, “The continent is waiting for Nigeria and South Africa. By trading among ourselves, we are able to retain more resources in the continent.” South Africa later signed the agreement.

44 countries initially signed the agreement on 21 March 2018. Nigeria was one of 11 African Union nations to avoid initially signing. At the time, Nigerian President Muhammadu Buhari said that Nigeria could not do anything that would undermine local manufacturers and entrepreneurs. The Manufacturers Association of Nigeria, which represents 3,000 Nigerian manufacturers, praised the decision to back out of the agreement. The Nigerian foreign minister tweeted that more domestic consultation was needed before Nigeria could sign the agreement. Former president Olusegun Obasanjo said Nigeria’s delay was regrettable. The Nigeria Labour Congress called the agreement a “renewed, extremely dangerous and radioactive neo-liberal policy initiative”, suggesting increased economic pressure would pressure workers into migration under difficult and unsafe conditions.

On 21 July 2018, five more nations signed the agreement, including South Africa. At that time, the Nigerian government emphasized its non-participation was a delay, not a withdrawal, and promised to soon sign the agreement. As the foreign minister had earlier emphasized, the Nigerian government intended to consult further with local businesses in order to ensure private sector buy-in to the agreement.

As the Nigerian government continued to consult with local business groups in the latter half of 2018, a key concern was whether the agreement adequately prevented anti-competitive practices such as dumping. As 2018 drew to a close, former President Olusegun Obasanjo said the delay was “regrettable”, emphasizing the lack of trade in goods amongst African countries, the difficulties in travelling from one African country to another, and the colonial legacy which these restrictions on Africa’s growth represented. The government steering committee in charge of the consultative process was due to release its report on the agreement in January 2019.

Advert

Nigeria’s president announced on 2 July 2019 that Nigeria would sign the AfCFTA in Niger the following week. Nigeria signed the AfCFTA on 7 July 2019.

Current Status

Most AU member states have signed the agreement. Benin, Botswana, Eritrea, Guinea-Bissau, Nigeria, and Zambia did not initially sign the agreement. President of Nigeria Muhammadu Buhari was particularly reluctant to join if it hurt Nigerian entrepreneurship and industry. On July 7, 2019 Nigeria and Benin committed to signing the Africa free trade at the 12th extraordinary session of the assembly of the union on ACFTA; leaving Eritrea as the only nation out of the 55 African Union Member States not to sign up to the deal.

The African Continental Free Trade Area did not come into effect until 22 of the signing countries ratified the agreement, which occurred in April 2019 when The Gambia became the 22nd country to ratify it. As of August 2020, there are 54 signatories, of which at least 30 have ratified and 28 have deposited their instruments of ratification. The three countries that have ratified but not yet deposited their ratifications are reported to be Cameroon, Angola, and Somalia though Morocco enacted a law authorizing ratification in 2019.

List of signatories and parties to the agreement

Other AU member states

CountrySignedDate of SigningRatifiedDate of RatificationDepositedDate of Deposit
 AlgeriaYesMarch 21, 2018YesDecember 15, 2019No
 AngolaYesMarch 21, 2018YesApril 28, 2020YesNovember 4, 2020
 BeninYesJuly 7, 2019NoNo
 BotswanaYesFebruary 10, 2019NoNo
 Burkina FasoYesMarch 21, 2018YesMay 27, 2019YesMay 29, 2019
 BurundiYesJuly 2, 2018NoNo
 CameroonYesMarch 21, 2018YesAugust 31, 2019Yes
 Central African RepublicYesMarch 21, 2018YesYes
 Cape VerdeYesMarch 21, 2018NoNo
 ChadYesMarch 21, 2018YesJune 29, 2018YesJuly 2, 2018
 Ivory CoastYesMarch 21, 2018YesNovember 13, 2018YesNovember 23, 2018
 ComorosYesMarch 21, 2018NoNo
 Republic of the CongoYesMarch 21, 2018YesFebruary 7, 2019YesFebruary 10, 2019
 Democratic Republic of the CongoYesMarch 21, 2018NoNo
 DjiboutiYesMarch 21, 2018YesFebruary 5, 2019YesFebruary 11, 2019
 EgyptYesMarch 21, 2018YesFebruary 27, 2019YesApril 8, 2019
 Equatorial GuineaYesMarch 21, 2018YesJune 28, 2019YesJuly 2, 2019
 EritreaNoNoNo
 EswatiniYesMarch 21, 2018YesJune 21, 2018YesJuly 2, 2018
 EthiopiaYesMarch 21, 2018YesMarch 23, 2019YesApril 10, 2019
 GabonYesMarch 21, 2018YesJuly 2, 2019YesJuly 7, 2019
 GambiaYesMarch 21, 2018YesApril 11, 2019YesApril 16, 2019
 GhanaYesMarch 21, 2018YesMay 7, 2018YesMay 10, 2018
 GuineaYesMarch 21, 2018YesJuly 31, 2018YesOctober 16, 2018
 Guinea-BissauYesFebruary 8, 2019NoNo
 KenyaYesMarch 21, 2018YesMay 6, 2018YesMay 10, 2018
 LesothoYesJuly 2, 2018YesYes
 LiberiaYesMarch 21, 2018NoNo
 LibyaYesMarch 21, 2018NoNo
 MadagascarYesMarch 21, 2018NoNo
 MalawiYesMarch 21, 2018NoNo
 MaliYesMarch 21, 2018YesJanuary 11, 2019YesFebruary 1, 2019
 MauritaniaYesMarch 21, 2018YesJanuary 31, 2019YesFebruary 11, 2019
 MauritiusYesMarch 21, 2018YesSeptember 30, 2019YesOctober 7, 2019
 MoroccoYesMarch 21, 2018NoNo
 MozambiqueYesMarch 21, 2018NoNo
 NamibiaYesJuly 2, 2018YesJanuary 25, 2019YesFebruary 1, 2019
 NigerYesMarch 21, 2018YesMay 28, 2018YesJune 19, 2018
 NigeriaYesJuly 7, 2019YesNovember 11, 2020Yes
 RwandaYesMarch 21, 2018YesMay 25, 2018YesMay 26, 2018
 Sahrawi Arab Democratic RepublicYesMarch 21, 2018YesApril 27, 2019YesApril 30, 2019
 São Tomé and PríncipeYesMarch 21, 2018YesMay 28, 2019YesJune 27, 2019
 SenegalYesMarch 21, 2018YesMarch 12, 2019YesApril 2, 2019
 SeychellesYesMarch 21, 2018NoNo
 Sierra LeoneYesJuly 2, 2018YesNovember 7, 2018YesApril 30, 2019
 SomaliaYesMarch 21, 2018YesNo
 South AfricaYesJuly 2, 2018YesJanuary 31, 2019YesFebruary 10, 2019
 South SudanYesMarch 21, 2018NoNo
 SudanYesMarch 21, 2018NoNo
 TanzaniaYesMarch 21, 2018NoNo
 TogoYesMarch 21, 2018YesJanuary 9, 2019YesApril 2, 2019
 TunisiaYesMarch 21, 2018YesYes
 UgandaYesMarch 21, 2018YesNovember 20, 2018YesFebruary 9, 2019
 ZambiaYesFebruary 10, 2019YesNo
 ZimbabweYesMarch 21, 2018YesApril 25, 2019YesMay 24, 2019

Eritrea has not signed due to tensions with Ethiopia, but following the 2018 Eritrea–Ethiopia summit the AU Commissioner for Trade and Industry now expects Eritrea to sign the agreement.

ADVERT

Human rights assessment

A July 2017 United Nations Economic Commission for Africa report argues that the CFTA may contribute to tackling poverty and inequality as its wide scope will facilitate structural changes in African economies. It is seen as a step towards meeting the African Union’s Agenda 2063 and the Sustainable Development Goals. The document was targeted to ensuring human rights were considered within the negotiations.

Sponsored content

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s