Conditions for Success in the Implementation of the African Continental Free Trade Agreement

Abstract

The African Continental Free Trade Agreement (AfCFTA) crossed the necessary threshold for continental implementation in May 2019. The speed at which the ratification happened could be interpreted as widespread political buy-in, in part, driven by analysis showing that lowering intra-African trade tariffs can produce significant long-term economic gains. While there is evidence that reducing barriers to trade can unlock economic potential, there are also examples of how free trade agreements can lead to social dislocations and destabilization. Therefore, in the ‘nuts-and-bolts’ of implementation, there will be factors which could foster as well as hinder member states’ engagement and cooperation in the actual implementation of the AfCFTA.

This executive summary of a broader technical report puts a spotlight on some of these factors as conditions for success (Kabandula et al., 2020). The aim is to offer member states evidence-based insights to help navigate the complexities that come with implementation, including identifying and managing trade-offs. Successful implementation of the AfCFTA could help deliver equitable human development, strengthen regional integration, and further the development agendas of African institutions including Agenda 2063.

Aware that conditions for the successful implementation of the AfCFTA are many and cut across multiple issue areas, the study analyses factors relevant for the deployment and implementation of the agreement. The initial implementation-level conditions for success are heavily dependent on the willingness of individual member states and their leaders to take action to implement the agreement, as well as their capacity and ability to coordinate and harmonize trade policies at the national, regional, continental and global levels. Additional conditions for success include the eliminating of all barriers to trade, good governance, and infrastructure development including information communication technologies. Nonetheless, during the implementation phase, it is vital for member states and citizens to have knowledge of the how the AfCFTA will impact their economies and livelihoods and for the African Union to anticipate concerns in order to put in mechanisms to mitigate losses from economic restructuring. To that end, the report presents analysis on (a) tariffs, (b) economic complementarity and (c) capital-labour ratios for 541 African countries. Thereafter, the future of trade patterns in Africa with and without AfCFTA are projected in the International Futures (IFs) model. Implementation of the AfCFTA is the choice of the African population, but it is also constrained and enabled by actions of other states in the international system. Current patterns of global protectionism and neo-mercantilist tendencies will shape how the trade agreement benefits African states. And some of these protectionist tendencies have arisen based on free trade agreements implemented with limited social support or policy intervention. Africa can learn lessons from these previous agreements.