The motivation:
The motivation of a single, tariff free continent has featured on the minds of African leaders for a long time given the commonality of trade both historically and contemporaneously. This idea has its roots in the Pan African ideals of the founding fathers of several African Nations who established the founding principles of a single African Continent of political and economic integration. This led to the Organisation of African Unity in 1963 up until the formation of Regional Economic Communities from the 1970s; the desire for closer integrated trade has dominated proceedings at several intergovernmental dialogues.
Plans for the Free Trade Area:
From post-colonial times in Africa, plan began to be mooted for a convergence into a single African Continental Free Trade Area. In January 2012, the African Heads of State and Governments resolved to establish the African Continental Free Trade Area (AfCFTA) treaty to create a single continental market for goods and services in member nations of the African Union (AU), with free movement of business persons and investments using a single currency. At the 18th Ordinary Session of the Assembly of the African Union held in Addis Ababa, Ethiopia in that year, African Heads of State and their representatives adopted a resolution, which would lead to the establishment of a Treaty on the African Continental Free Trade Area (AfCFTA). It was hoped that the Free Trade Area would become operational by an initial indicative date of 2017. The Summit further endorsed an Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven key clusters for harmonization and these are in the areas of; trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration.
The AfCFTA deal has four legal instruments:
· The framework agreement establishing the AfCFTA;
· the protocols on trade in goods;
· protocol in trade in services; and
· the protocol in dispute settlement.
The agreement is expected to remove taxes from up to 90 per cent of the 200 items traded on the continent, making them cheaper for consumers.
The Commencement Plan:
It was envisaged that upon commencement, the Continental Free Trade Area would bring together all fifty-four African countries with a combined population of more than one billion people and a combined Gross Domestic Product of more than US $3.4 trillion[i]. Indeed the aim was to create the largest single intra trade arrangement and market outside of the World Trade Organisation[ii] and put Africa on the pedestal comparable with the then emergent Trans Pacific Trade Partnership (TPP) between Asia and the United States. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022[iii].The scope of the Treaty covered agreements on trade in goods, services, investment, and rules and procedures on dispute settlement, including a range of provisions to facilitate trade, reduce transaction costs, provide exceptions, flexibilities and safeguards for vulnerable groups and countries in challenging circumstances.
As envisaged by the signatories to the Agreement, consultations and negotiations for establishing the treaty commenced in June 2015 during the 26th Ordinary Session of the AU Assembly Heads of State and Government in Johannesburg, South Africa. Following that Meeting, the year 2017 was adopted as the deadline for ensuring that the treaty would become operational. A working committee on the AfCFTA under the leadership of the President of the Republic of Niger, Mr. Issoufou Mahamadou began work on a draft Report into the modalities for the establishment of a Treaty on the Free Trade Area and this was submitted at the start of 2018.
Three years after initial negotiations, a draft agreement was agreed to by virtue of Doc. Ext/Assembly/AU/2(X) finally signed on March 21, 2018 during the 18th Extraordinary Session of the Assembly of AU Heads of State and Governments in Kigali, Rwanda, alongside the Kigali Declaration and the Protocol of Free Movement.
At this seminal event, the President of Rwanda, Paul Kagame noted that “less than 20 percent of Africa's trade is internal...” assuring sceptics that “increasing intra-African trade, however, does not mean doing less business with the rest of the world.” Signatory nations and the African Union have planned that further negotiations should continue in 2018 with Phase II, the Issoufou Report being Phase I. Negotiations here will focus upon the development of a common policy for areas of investment, competition and intellectual property rights and it is expected that the AU Assembly negotiations will be concluded in January 2020.[iv]
The Signing and Ratification of the AfCTA
South Africa, Sierra Leone, Namibia, Lesotho and Burundi signed the African Continental Free Trade Area (AfCFTA) agreement in Nouakchott, bring the number of countries that have inked the deal to 49
Nations so far have ratified the Treaty as of Ghana and Kenya Chad and the Kingdom of Swaziland joined four other countries that have ratified the agreement. It is envisaged that upon the ratification of the Treaty by 22 nations, it will take effect and be in force.
Nigeria and the AfCTA
Nevertheless, the Treaty is not without its critics and it is important to note that a consensus was not reached among the member nations of the African Union, especially countries whose policies heavily relied to a certain extent on tariffs and who opined that their economies would be adversely affected by an inability to compete favourably with larger economies. These Nations requested for more time to continue consultations on the potential impacts on their economies and have so far not acceded thereto. Indeed, some African (mainly commodity exporting) Countries did not sign the agreement including Nigeria and other five countries, South Africa recently signed the agreement.
Nigeria is till dragging her feet, the organize private sector and labour unions need to put their house in order and fall in line accordingly. Locally we are driving the ease of doing business while internationally we are shying away from doing business with the world what an oxymoron.
Nigeria being the giant of Africa should be championing good governance and convergence with other economies other than shying away. It is my believe that Nigeria will soon join the community of these converging nations and sign the AfCTA.
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[i]Justina Crabtree, Africa is on the verge of forming the largest free trade area since the World Trade Organization, (publ. 11:28 AM ET Tue, 20 March 2018 on <https://www.cnbc.com/2018/03/20/africa-leaders-to-form-largest-free-trade-area-since-the-wto.html> retrieved on 15th May 2018 at 10:50 am. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022
[ii] MEDIA ADVISORY: Rwanda to Host the Extraordinary Summit on the AfCFTA Africa Launches: The African Continental Free Trade Area (AfCFTA), (African Union Directorate of Information and Communication), retrieved from website <https://au.int/sites/default/files/newsevents/mediaadvisories/33975-ma-media_advisory_rwanda_to_host_extraordinary_summit_on_the_cfta.pdf> on 2018-05-15, 11:19hrs
[iii] The UNECA was established by the United Nations General Assembly Session 12 Resolution 1155. Proposed Economic Commission for Africa A/RES/1155(XII), 26 November 1957. Retrieved 2018-5-15 11:34hrs.
[iv] Erasmus, Gerhard (22 March 2018) . "How will the AfCFTA be established and its Legal Instruments be implemented?". tralac Discussion, trade law centre.<http://www.tralac.org>. Retrieved 2018-05-15. 10:29hrs