The AfCFTA is here. Follow the facts from creation to date.
- The creation of an African Continental Free Trade Area (AfCFTA) was proposed at the 18th Ordinary session of the Assembly of the African Union in Addis Ababa, Ethiopia in January 2012. The AfCFTA is one of the flagship projects of the first 10-year implementation plan of the African Union’s Agenda 2063 – which is Africa’s blueprint and master plan for transforming the continent into the global powerhouse of the future.
- The AfCFTA is a framework Agreement covering trade in goods and services including Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, Competition Policy, and Dispute Settlement; and their associated Annexes and Appendices.
- The AfCFTA agreement establishes a single continental market for goods and services and seeks to increase intra-African trade by reducing and eventually eliminating custom duties and non-tariff barriers. The agreement seeks to harmonize trading rules at the regional and continental level. In terms of numbers of participating countries, the AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization in 1995.
- At the African Union Summit in Johannesburg, South Africa, in 2015, the AfCFTA negotiations were launched. The first meeting of the AfCFTA negotiation forum held in February 2016. There have been over 18 meetings of the AfCFTA Negotiation forum.
- Phase 1 of the negotiations (scheduled to have been concluded in March 2018) covers trade in goods, services, trade facilitation and dispute settlement. However, there are aspects that still remain outstanding. The Schedules of Tariff Concessions, the Rules of Origin, and the Schedules of Specific Commitments on Trade in Services are yet to be finalized for all countries.
- Phase 2 negotiations cover areas of investment, Intellectual Property Rights and Competition policy. This phase is already underway though the Covid-19 pandemic slowed down the negotiations. December 2020 has been slated for the conclusion of phase 2 negotiations.
- Phase 3 negotiations cover digital trade and e-commerce. The Secretary-General of AfCFTA secretariat has announced that the negotiations would be fast-tracked to begin early 2021 as the Covid-19 pandemic has increased the need for governance in digital trade and e-commerce.
AfCFTA Treaty Signatories
- At the Extraordinary Summit of African Union Heads of State and Government held on the 21st March 2018 at Kigali, Rwanda, the Agreement establishing the AfCFTA was presented for signature, along with the Kigali Declaration (for the launch of the African Continental Free Trade Area) and the Protocol to the Treaty Establishing the African Economic Community relating to the Free Movement of Persons, Right to Residence and Right to Establishment. 44 countries signed the consolidated text of the AfCFTA Agreement, with Nigeria’s absence standing out. 47 countries signed the Kigali Declaration and 30 countries signed the Protocol on Free Movement.
- 54 countries out of the 55 African Union member states have signed the Agreement. Eritrea is the only state yet to sign the Agreement. The country’s stance is that the government of Eritrea advocates regional integration over continental aspirations.
Entry Into Force
- On the 30th of May 2019, the AfCFTA Agreement entered into force for the 24 countries that had deposited their instruments of ratification. This date marked 30 days after which the twenty-second (22nd) instrument of ratification has been deposited (as provided for in Article 23 of the AfCFTA Agreement). The designated depositary is the Chair of the African Union Commission as stipulated in Article 24 of the AfCFTA Agreement.
- The twenty-second (22nd) country threshold in conformity with the legal provision was reached on 29 April 2019 when Sierra Leone and the Saharawi Republic deposited their instruments of ratification with the Chair of the African Union Commission.
- As at December 5, 2020, which was the deadline for all signatories to ratify the Agreement; 36 countries have complied with the domestic requirements for the ratification of the AfCFTA Agreement to become State Parties. 34 countries have deposited their instruments of ratification with the depositary (Chair of the African Union Commission). 41 countries/customs unions have submitted their tariff offers, including the East African Community (EAC) and the Economic Community of West African States (ECOWAS).
Launch of The Operational Phase of The AfCFTA
- The operational phase of the AfCFTA was launched at the 12th Extraordinary Session of the Assembly of the African Union in Niamey, Niger on 7 July 2019. The AfCFTA would be governed by five (5) operational instruments – the Rules of Origin, the online negotiating forum, the monitoring and elimination of non-tariff barriers, a digital payments system and the African Trade Observatory. At the Extraordinary Summit, it was also decided that the Republic of Ghana would host the AfCFTA Secretariat.
- Also, at the Summit, the 7th of July each year has been designated as “the Africa Integration day,” without it being a holiday to commemorate the operation of the AfCFTA Agreement and to popularise economic integration across the Continent as a lever of inclusive sustainable development.
- Trading under the AfCFTA was originally supposed to begin on 1 July 2020 but has now been put off until 1 January 2021.
THE AfCFTA Secretariat
- The AfCFTA Secretariat is part of the institutional framework for the implementation, administration, facilitation, monitoring and evaluation of the AfCFTA Agreement. Article 13 of the AfCFTA Agreement provides for the establishment of a Secretariat by the Assembly of Heads of State and Government of the African Union.
- At the 33rd Ordinary Session of the African Union (AU) Assembly of Heads of State and Government, held in Addis Ababa, Ethiopia, from the 9th – 10th February 2020, Mr. Wamkele Mene, who is from South Africa, was elected as the first Secretary General of the AfCFTA Secretariat, for a four-year mandate.
- Mr. Wamkele Mene was sworn-in on 19 March 2020 at the African Union Headquarters in Addis Ababa, Ethiopia. This marked the AfCFTA Secretariat being operational, replacing the African Union Commission, which served as the interim Secretariat. The Secretary General is expected to provide leadership and technical support to the AfCFTA Secretariat and to manage the day-to-day activities of the AfCFTA Secretariat; as well as to ensure the implementation of the AfCFTA Agreement and strategic collaboration; stakeholders' engagement; and resources mobilization for the implementation of the AfCFTA Agreement.
- The AfCFTA Secretariat Building was officially commissioned and handed over by the African Union to Ghana on Monday, 17th August 2020. The AfCFTA Secretariat is situated in Accra.
The AfCFTA and The European Union Ongoing Support
- The European Union (EU) and its Member States are the African Union’s main partners in the AfCFTA project and have been supporting the AfCFTA process from the very beginning. The European Union is Africa’s largest trading partner, making up 30.7% of Africa’s total trade in 2019. The EU was also Africa’s largest source of Foreign Direct Investment (FDI) in 2017 - EUR 221 billion of FDI stocks. The EU and its Member States are the largest providers of Official Development Assistance (ODA): 58% of total ODA to Africa amounting to EUR 24.9 billion in 2018.
- Through its Pan-African Programme, the EU has earmarked a total of EUR 72.5 Million to support the AfCFTA in the period 2014-2020. Additional support comes from the wider EU Aid for Trade for Africa and through the EU External Investment Plan for Africa and the Neighbourhood. The EU support to the AfCFTA can be catergorised into support to the AfCFTA negotiation-ratification process and architecture and support to the implementation of the AfCFTA.
- The EU’s support to the Negotiation process and Architecture so far amounts to EUR 21.1 Million while the support to the implementation of the AfCFTA amounts to EUR 16 Million.
Benefits of The AFCFTA to The African Continent
- The AfCFTA will help bring together a market of more than 1.2 billion people, with a combined Gross Domestic Product (GDP) of more than US$3.4 trillion. Estimates from the Economic Commission for Africa (UNECA) suggest that the AfCFTA has the potential to boost intra-African trade by 52.3 percent by 2022 by eliminating import duties, and to double this trade if non-tariff barriers are also reduced (this offers numerous benefits to the Small and Medium-sized Enterprises (SMEs). It is also estimated that the economy of Africa would be worth US$29 trillion by 2050.
- The African Continental Free Trade Area (AfCFTA) can play an important role in helping African countries diversify their productive capacities and integrate into regional and global value chains. The AfCFTA can also support Africa’s COVID-19 recovery, and increase its economic resilience to future shocks. The AfCFTA would help usher in the kinds of deep reforms necessary to enhance long-term growth in African countries.
- The African Continental Free Trade Area (AfCFTA) presents a major opportunity for African countries to bring 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day. The AfCFTA would help boost Africa’s income by $450 billion by 2035 (a gain of 7 percent) while adding $76 billion to the income of the rest of the world. Africa’s export would also increase by $560 billion, mostly in the aspect of manufacturing. The AfCFTA would also help boost the wages for both skilled and unskilled workers—10.3 percent for unskilled workers, and 9.8 percent for skilled workers and spur larger wage gains for women (10.5 percent) than for men (9.9 percent).
- The AfCFTA could further enable African states to transition towards a collective bargaining bloc, negotiating as one market and strengthening Africa’s common voice in global trade deals.
Benefits of The AfCFTA to Nigeria
- The AfCFTA would afford Nigeria’s exporters of goods and services, an expanded market thereby spurring economic growth and boosting job creation. This expanded market allows manufacturers to increase capacity and expand into other African countries. There would no longer be barriers against Nigeria’s products.
- The AfCFTA safeguards the Nigerian economy from dumping and other unfair trade practices and ensures trade remedies. The AfCFTA also provides for a Dispute Settlement Mechanism for resolving unfair and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries.
- The AfCFTA provides a platform for the integration of Small and Medium Enterprises (SMEs) into the regional and continental economy. It provides an expanded platform for Nigerian manufacturers and service providers to connect to regional and continental value chains. The AfCFTA would also help accelerate women’s empowerment in every area.
- For Nigeria, the AfCFTA can help expand Nigeria’s position as the largest economy on the continent and help consolidate Nigeria’s leadership role in Africa.
Sarah Akpofure | Research Analyst, Trade & Investment | firstname.lastname@example.org
Ayotunde Abiodun | Research Assistant, Trade & Investment | email@example.com
The opinions expressed are the sole responsibility of the authors and do not necessarily represent the official position of borg.
The ideas expressed qualifies as copyright and is protected under the Berne Convention.
Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is notified.
©2020 borg. Legal & Policy Research