What Next: The AfCFTA in Context

What Next: The AfCFTA in Context

A triumph! Despite one of the biggest economies in Africa cancelling their trip to Kigali, the signing of the AfCFTA went ahead as planned. The absence of Nigeria did not deter other leaders from attending, particularly from other economic giants on the continent such as South Africa and Kenya, who were represented by their respective Heads of States.

The AfCFTA is the first agreement of this size to be concluded by the continental leaders. Now that the leaders have signed this agreement, what next?

At Kigali Rwanda, three documents were set to be signed:

  1. The AfCFTA (framework agreement),
  2. The Kigali Declaration and
  3. The Agreement on the Free Movement of Persons

Overall, 50 signatures out of 55 were obtained; 44 for the AfCFTA Framework Agreement, 47 for the Kigali Declaration and 30 signatures for the Agreement on the Free Movement of Persons. Forty-four Member States (indicated in the map above in blue) signed the AfCFTA while six Member States signed the Kigali Declaration only (indicated in red on the map). The remaining five Member States (indicated in the map above in green) did not attend or sign any of the agreements. But what sets the Kigali Declaration apart from the Framework Agreement?
For Heads of State and other delegates that do not have the executive authority to sign a trade agreement like the AfCFTA into law, the Kigali Declaration serves as an instrument that shows their support and solidarity for the agreement. Once processes at home are cleared, the Framework Agreement can then be signed. The agreement will only come into force after 22 signatures is coupled with 22 ratifications. Member States that signed the agreement have 160 days in which to ratify the agreement, while those that have not signed have 160 days to sign the agreement.

Of the five SACU members, only Swaziland signed the AfCFTA and the Kigali Declaration while the remaining members (South Africa, Botswana, Namibia and Lesotho) signed the Kigali Declaration. South Africa cited its parliamentary process as the main reason for not signing the Framework Agreement, but only the Kigali Declaration. In terms of section 231 of the Constitution of the Republic of South Africa, the negotiating and signing of all international agreements is the responsibility of the national executive. As such, “an international agreement binds the Republic only after it has been approved by resolution in both the National Assembly and the National Council of Provinces.” The AfCFTA requires ratification and just signing the agreement is not sufficient. Thus, for South Africa, the AfCFTA needs to go through a parliamentary process before it can be ratified. The 160-day hourglass is already running out for South Africa.

SACU members that did not sign the agreement may be politically motivated, in that they follow in the footsteps of South Africa as SACU members. However, the government of Botswana cited the unfinished status of the AfCFTA annexes – the Protocol on Trade in Goods and Services – as a motivating factor. They further cited that the AfCFTA has to go through a consultative and constitutional process designated for treaty making according to Botswana laws. At the time of publication there were no official statements from Namibia or Lesotho on why they did not sign the agreement.

However, Nigeria’s absence is still baffling. As the news media cover the President’s official line on his cancelation, being one of labour union appeasement, another reason that may have been overlooked by many is President Buhari’s protectionist campaign promoting local products. President Buhari’s not signing the agreement may be in line with an opposition to the CFTA that will open Nigeria’s markets to foreign goods, hindering local entrepreneurship and encouraging dumping of finished goods. But will Nigeria remain on the fringes while the rest of the continent moves ahead in negotiating the outstanding provisions?

The signing of the AfCFTA sets the wheels in motion for Africa’s integration process and boosting intra-African trade. But with Africa’s two biggest economies yet to insert their signatures, the first dissenters might just be harbingers for what’s yet to come as we await the critical mass of ratifications and the outstanding negotiations. Overall the rest of Africa is sending a positive message to the other members that the agreement will enter into force and carry on forward.

Photo credit: GovernmentZA on VisualHunt / CC BY-ND

A New Dawn on the Horizon? The CFTA in Context

A New Dawn on the Horizon? The CFTA in Context

Africa might become a whole lot smaller in 2018 – or certainly more connected – as African Union (AU) members gather in Kigali, Rwanda, to sign the African Continental Free Trade Area (AfCFTA). The mammoth free trade agreement seeks to bring the 55 AU Member States into the AfCFTA. The signing ceremony is scheduled to occur at the upcoming AU Extraordinary Summit (17-21 March, 2018) and marks the conclusion of the first phase of negotiations on the AfCFTA that aims to create a single continental market for goods and services, free movement of business persons and investments.

At the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU) held in January 2012, parties resolved to establish the AfCFTA. This entails creating a single continental market aimed at integrating the regions and boosting intra-African trade. This is in line with the mandate of the Abuja Treaty of 1991 that envisioned the creation of AfCFTA through a linear integration process to be undertaken in six stages, with the end goal being the creation of a common monetary union. This is one of the first flagship programmes envisioned by the AU’s Agenda 2063. Within this linear integration process the AfCFTA was launched to achieve,

“…a comprehensive and mutually beneficial trade agreement among the Member States of the African Union…within the broader framework of the Abuja Treaty Establishing the African Economic Community…to pave the way for accelerating the establishment of the Continental Customs Union”[1]

The AfCFTA will not create a customs union immediately, but rather will emphasise the establishment of a free trade area to pave the way through a gradual process of tariff elimination. The AfCFTA’s mandate includes,

  • the creation of a comprehensive and mutually beneficial trade agreement;
  • the creation of a customs union
  • a single continental market for goods and services with free movement of business persons and investments.
  • to overcome dependency on primary goods;
  • to enhance competitiveness and boost intra-African trade;
  • via regional integration – to resolve challenges with overlapping memberships; and
  • to promote regional value chains.

The full scope of the agreement will cover Trade in Goods, Trade in Services, Investment, Intellectual Property Rights and Competition Policy. Negotiations for the AfCFTA commenced in 2015 with the date for concluding the agreement initially set for 2017 but, will only be concluded with the signing on 21 March, 2018. The AfCFTA is one of the first flagship programmes to be launched by the AU outlined in the AU Agenda 2063.

The AfCFTA relies on the 8 Regional Economic Communities (RECs) as building blocks. This is in line with the 8 RECs formally recognised by the AU following the Protocol on Relations between the African Union and the RECs. The idea is to facilitate the harmonisation of policies, deal with the challenges relating to overlapping RECs, regulate the proliferation of RECs and ensure compliance with the Abuja Treaty.[2]

The negotiations are being conducted in two phases. Phase One focused on trade in goods, trade in services and dispute settlement. Phase Two, which will commence only after the final conclusion of Phase One, will focus on Competition Policy, Intellectual Property Rights and Investments.

However, it appears that Phase One of the negotiations has been concluded, since African leaders are expected to sign the agreement on 21 March 2018 at the Extraordinary Summit of the AU. Yet, there are some contentious outstanding issues that still need to be concluded, such as the compensation mechanism (for states whose revenues will be impacted by import liberalisation), dispute settlement and rules of origin.

Therefore, many questions have come to the fore. First, what exactly are the leaders signing?
Will the AfCFTA go the TFTA route and proceed with the agreement under the auspices of an umbrella clause, with negotiations continuing beyond signature? It was to be expected considering the size of the agreement and wide variety of economies that are participating. We can only speculate until the AfCFTA is unveiled on the date of signing.

Second, what is the relationship between the TFTA and the CFTA, and the many other RECs on which the framework agreement was built?
Specifically, will the AfCFTA supersede all these pre-existing RECs or will it be complementary? What role do the pre-existing RECs play in the broader agenda of the AfCFTA and the Abuja Treaty, considering one of the many challenges of the RECs in Africa is the continual overlap of members between the different RECs?

The conclusion of the AfCFTA brings with it many expectations from different stakeholders. The main areas of interest in the agreement is on trade facilitation, technical barriers to trade, sanitary and phytosanitary measures, non-tariff barriers, trade remedies, customs cooperation and rules of origin. Other key aspects include provisions on protection of infant industries and rules of origin (cumulation of origin).

Africa faces trade challenges relating to the limited trade between states (low intra-African trade), import-dependence and a heavy reliance on primary commodities exports. Thus, the above mentioned areas of interest are crucial in tackling some of these challenges through developing regional value chains and boosting intra-African trade. If the agreement is implemented properly,[3] it could provide an enabling environment to improve regional value chain formation, contribute to achieving the Sustainable Development Goals (including poverty, jobs creation, etc.), boost intra-African trade by creating a single continental market and promote regional integration.

The introduction of the AfCFTA raises many expectations with the hopes that it will bring a new dawn for Africa’s trade and economic community. At this stage the jury is still out on whether the agreement, to be signed on March 21st, will live up to the media hype, considering the number of known unknowns.


Photo credit: Embassy of Equatorial Guinea on Visual hunt / CC BY-ND

[1] Executive Council: Twenty-Seventh Ordinary Session, Johannesburg 2015. http://archive.au.int/collect/oaucounc/import/English/EX{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}20CL{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}20907{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}20(XXVII){fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}20_E.pdf. Accessed 14 March 2018.

[2] These RECs include the Community of Sahel-Saharan States (CENSAD), Intergovernmental Authority of Development (IGAD), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), East African Community (EAC), Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA) and Arab Maghreb Union (UMA).

[3] Members state implement the measures by removing all NTBs, tariff liberalisation and implement trade facilitation measures to open up borders.