African countries officially began trading under a new free trade area across the continent on Friday, after months of delays caused by the global coronavirus pandemic.
But experts see the launch of New Year’s Day as largely symbolic of the full implementation of the deal, which is expected to take years.
The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $ 3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization.
Supporters say it will increase trade among African neighbors while allowing the continent to develop its own value chains. The World Bank estimates that it could lift tens of millions out of poverty by 2035.
But obstacles – from ubiquitous bureaucracy and poor infrastructure to the entrenched protectionism of some of its members – must be overcome if the bloc is to reach its full potential.
Trade under AfCFTA was intended to be launched on 1 July but was pushed back after COVID-19 made it impossible to negotiate in person.
But the pandemic also gave the process increased impetus, says Silver Ojakol, chief of staff at AfCFTA’s secretariat.
“We saw the effects on our economies of import disruptions due to the pandemic,” he said. “So there has actually been an increase in the political will to increase intra-African integration.”
All African countries except Eritrea have signed the AfCFTA Framework Agreement and 34 have ratified it. But observers like W. Gyude Moore – a former Liberian minister who is now a senior fellow at the Center for Global Development – say the real work is starting now.
“I would be surprised if they can get everything ready within 24 months,” he told Reuters. “For long-term success, I think we need to look at how long it took Europe. This is a process that spans several decades.”
‘We have to start somewhere’
Historical challenges, including Africa’s poor road and rail links, political unrest, excessive border bureaucracy and petty corruption, will not go away overnight.
And an annex to the deal describing the rules of origin – an important step in determining which products may be subject to duties and duties – has not yet been completed.
Meanwhile, 41 of the zone’s 54 member countries have submitted tariff reduction schedules.
Members must abolish 90% of tariffs – over five years for more advanced economies or 10 years for less developed countries. An additional 7% who are considered sensitive will have more time, while 3% may be placed on an exception list.
Completing these schedules and communicating them to companies must be done quickly, says Ziad Hamoui of the Borderless Alliance, a group working for simpler cross-border trade.
But efforts to implement the deal are also likely to meet opposition from the countries’ domestic interest groups. Fear of losing to more competitive neighbors initially made some countries, including West African giant Nigeria, skeptical of the Pan-African project.
Nevertheless, proponents of the zone are convinced that the first steps towards its implementation will already enable Member States to double trade in Africa by 2025.
“Economic integration is not an event. It is a process,” said the AfjFol Secretariat’s Ojakol. “We have to start somewhere.”