The promise and perils of free trade across Africa

The promise and perils of free trade across Africa

As the world grapples with economic uncertainties, Africa is taking a bold step towards economic integration through the African Continental Free Trade Area (AfCFTA). Launched on January 1, 2021, the AfCFTA aims to create a single market for goods and services, boosting intra-African trade and economic cooperation. This ambitious initiative could be a game-changer for the continent, but it is not without its challenges.

The AfCFTA, covering 54 of Africa’s 55 countries, is the largest free trade area by number of participating countries since the European Union’s single market. It has the potential to reshape African economies by increasing trade among African nations, which currently lags at around 16% of the continent’s total trade compared to intra-European trade at approximately 70%. 

Free trade within Africa promises numerous benefits. By reducing tariffs and non-tariff barriers, the AfCFTA aims to lower the cost of goods and services, making them more accessible. It encourages economies of scale and attracts foreign investment by creating a more predictable and unified market. The World Bank estimates the AfCFTA could lift 30 million people out of extreme poverty and increase the earnings of nearly 68 million others, boosting income across the continent by $571 billion by 2035.

Implementation of AfCFTA has been uneven with Ghana and Rwanda standing out as making significant advances. Ghana has streamlined customs procedures and invested in trade infrastructure. Similarly, Rwanda has embraced digital trade platforms to reduce bureaucratic delays and enhance trade efficiency. 

However, the road to realizing these benefits across the continent is fraught with obstacles. Infrastructure deficiencies, such as poor transportation networks and unreliable energy supplies, pose challenges. Political instability and bureaucratic inefficiencies in many African nations could hamper implementation efforts. Corruption remains a persistent menace, undermining trust and the rule of law necessary for a successful free trade area.

Moreover, the economic disparities between African nations mean that the benefits of the AfCFTA may not be evenly distributed. Wealthier countries with more developed manufacturing bases are likely to reap greater rewards, potentially exacerbating existing inequalities. Smaller and less developed nations could struggle to compete, leading to fears of economic domination by regional powerhouses like South Africa and Nigeria.

Addressing these issues requires a concerted effort from all member states. Investment in infrastructure is crucial to support the free flow of goods and services. Strengthening institutions to ensure transparency and reduce corruption is equally important. Policies must support smaller economies and ensure that the benefits of free trade are shared equitably across the continent. 

Properly implemented, the AfCFTA could accelerate economic integration and growth across the continent. The journey is long and complex, but the rewards for Africa’s billion-plus inhabitants could be transformative.

*Lonzo Cook is a journalist and writer. He spent two decades at CNN in a series of senior editorial and management roles including leading breaking news operations across Asia, the Middle East and Latin America. In addition to writing on international affairs, national security and business, he works with media companies and corporations on how to evolve and create content to stay relevant to key audiences.

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