The Largest Free Trade Area to Land in Africa, but People are Sceptical

December 21, 2020 / 18.00 PM --

On January 1, 2021, Africa will be home to the largest free trade area in the world. African countries are building a giant free-trade area that will see them trading with each other. African Union (AU) chairperson and South Africa President, Cyril Ramaphosa said the continent’s political leadership is to take a leap of faith in operationalizing the African Continental Free Trade Area (AfCFTA) come January.

Addressing a virtual African Union Heads of State and Government’s 13th Extraordinary Session of the Assembly on the AfCFTA, on December 5, 2020, Ramaphosa said the commencement of trading under the Africa-wide free trade area next year is a significant milestone that will liberalize services and reduce non-tariff barriers.

“As we march towards the start of trading under the African Continental Free Trade Area on the 1st of January 2021, we are mindful that its success cannot be separated from a stable and conducive business environment that is able to attract foreign direct investment,” Ramaphosa said.

But Africans are skeptical

That said, the deal is not without flaws. Skepticism within the continent is warranted.

According to a 2019 survey by Kasi Insight, little efforts have been made towards bringing awareness about this ambitious continental free trade area.

The survey, ‘Measuring the impact of the AfCFTA on Africans’ revealed that lack of overall awareness of the purpose of this free trade agreement can hinder popular acceptance.

Conducted in Kenya, Ghana, Nigeria, South Africa, Ivory Coast, Cameroon, and Tanzania between Feb 28 and March 6 2019, the survey revealed that that the plan doesn’t have the same level of appeal across the African countries.

Africans have varying awareness of current multi-country agreements

The survey revealed that although South Africans have a high level of awareness of their country’s current multi-country agreements (91%), only 21% considered that these agreements were helpful to them and 51% reported these agreements had not helped them.

The survey also stated that the effectiveness of current multi-country agreements in Africa is questionable with less than half of respondents in Kenya, Tanzania, Ghana, and South Africa benefiting from those agreements.

Ghanaians and Cameroonians were least aware of their countries' multi-country agreements and the awareness levels were at 37% and 22% respectively.

The list of agreements throughout the continent includes Arab Maghreb Union, Common Market for Easter and Southern Africa, Community of Sahel-Saharan States, East African Community, Economic Community of Central African States, Economic Community of West African States, and Southern African Development Community.

Some perceive the benefits but views are not uniform across countries

The Kasi Insight survey indicated that over 75% of South Africans think that AfCFTA will allow them to find work more easily. About 60% of Ivorians think that free trade will allow them to buy things more cheaply.

“Overall, there isn’t much optimism in terms of benefits across African countries though significant variations in perceived benefits exist,” the survey reported.

But Ramaphosa thinks that if AfCFTA is to succeed they have to overcome the political and socio-economic challenges that face the continent.

He acknowledged the need to address issues of poverty, inequality, and underdevelopment. “We have to address issues of security and instability, which are causing untold suffering for the African people and holding us back from realizing our full potential.”

The lack of solid infrastructure within the continent is a challenge for robust continental trade. The poor transport links within Africa are a limitation. Logistics and transportation would be integral to the success of AfCFTA.

During an interview on Radio 702 on The Money Show, Andrew Robinson, Director at Norton Rose Fulbright South Africa said Africa needs a “corridor” and a significant focus on building and refurbishing roads and rail systems to allow for the free flow of goods.

“Without it”, said Robinson, “Trade is impossible.”

Eritrea only country not part of AfCFTA

So far every single country in Africa, except Eritrea, is now part of AfCFTA. The Secretariat officially opened in Accra on 17 August 2020, although, because of the COVID-19 pandemic, free trading will now begin in January instead of the originally scheduled date of 1 July 2020.

African countries could rake in $20 billion yearly by simply tackling non-tariff barriers that slow the movement of goods, according to the UN Conference on Trade and Development, the UN entity that deals with trade investment and development issues.

The African Union estimates that AfCFTA will increase trade among African countries by 60% in the next three years. Only 16% of international trade happens between African economies.

Find a link to the survey report here!

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