African Continental Free Trade Area: A Brave Step Towards African Integration

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Last week brought the signing of the pact establishing the African Continental Free Trade Area (AfCFTA) in Kigali at an extraordinary summit of the African Union (AU). It appears that 44 of the 55 member states have signed the pact in the first instance but not the two largest economies on the continent (Nigeria and South Africa). We understand that members have six months to ratify the pact, which should allow all governments to read the small print, along with their stakeholders.  

Prior to ratification, signatories will be looking for more color on the pledge that the free trade area will move 90% of tariff lines to zero duty. The lines in question are yet to be identified. The measure is not based upon values or tonnages but on the number of lines, we understand.

The Manufacturers Association of Nigeria is reserving its judgment, and adamant that it does not have a protectionist agenda. As with an Economic Partnership Agreement (EPA) with the EU, which it declined to sign, it wants to be sure that the area serves the interest of its members.

Additionally, it fears a surge of imports from the EU through Morocco, which has signed an EPA and applied for membership of the Economic Community of West African States (ECOWAS). This application has not been welcomed with enthusiasm by some community members (including Nigeria).

In Kigali, the AU also considered a protocol on the free movement of persons and an African passport, which we understand 27 members signed. The more integration on the menu, the fewer diners at the table.

UNCTAD is said to have estimated that the removal of the import tariffs would boost regional trade by one third and lift Africa’s GDP by 1% over time. This looks less exciting when we consider similar broad-brush estimates for the impact of full access to electricity and the internet right across Africa.

It is logical for trade agreements to come before currency unions. This has been the sequence of events in the EU, the East African Community, where the single currency remains a step too far for members, and ECOWAS, where such a project even for a handful of its members has proved a still greater challenge.

The debate post-Kigali seems to overlook the fact that Africa already boasts a currency union with harmonized trade policy. The Franc Zone consists of 15 African states under three separate treaties. We can disagree whether the zone has been a developmental success although we may conclude that results have been mixed since its members have generally supported AfCFTA. 

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