Before Promoting Trade under the AfCFTA, We Must First Understand It!

Introduction

Since African countries signed the African Continental Free Tarde Area (AfCFTA) in 2018,  several African countries have begun trading under it, with over 17 countries trading under an initiative called the Gilded Trade Initiative (GTI). However, signing the agreement was important, but to implement it effectively, we must understand it. Engagement with civil society reveals there is no clarity on how to export under the AfCFTA, what documents to complete and what fees are payable where. Before we go about advocating for free trade, we need to understand what progress has been made with the African Continental Free Trade Area (AfCFTA). In this article, we look at the progress that has been made so far on the African continental free trade area and discuss the main protocols in greater detail. The rationale is simple, to advocate for free trade, we must first understand it.

In a step that takes the AfCFTA well above other free trade agreements, on February 19, 2023, the African Union (AU) Assembly of Heads of State and Government adopted three new protocols to the AfCFTA agreement — on investment, intellectual property rights, and competition policy.

Phase I: Trade in goods, services, and dispute settlement


Despite trading under the agreement being permitted, negotiations continue for various details such as tariff schedules, rules of origin, the Trade Remedy Guidelines, and services commitments for the five priority sectors for liberalization (Transport, communication, financial, tourism, and business services). Phase one has been completed but countries like Cameroon must remove policies that unilaterally bar foreign networks from coming into the Cameroonian market. The United Nations finds the internet to be expensive in Cameroon; competition could change that.

“To promote intra-African trade without liberalizing key sectors like communication will slow the pace of integration, allowing consumers to pay higher prices for much longer. Only consumers will bear the brunt as their hopes for a faster pace of development are dashed by protectionism and an unwillingness to adapt competitively”

Phase II: Intellectual property rights, investment, and competition policy


Negotiations for Phase II have commenced and were disrupted by the COVID-19 Pandemic, resulting in delays. However, the negotiations to conclude the outstanding Protocols of Phase II are well advanced and should be completed soon. Phase two has been completed and signed off by the AU General Assembly.

Phase III: Digital trade and women and youth in trade


Negotiations for Phase III will commence upon the completion of Phase II is still being negotiated and should be ready by the end of 2024. Women and youth tend to be marginalized from the policy space, but the AfCFTA seeks to change this. We cannot forget that Africa is the continent with the youngest population worldwide. As of 2023, around 40% of the population was aged 15 years and younger, compared to a global average of 25%. It is vital to ensure that cash-strapped youths can trade effectively under the AfCFTA, but beyond protocols, this involves sensitizing them on export procedures, vulgarising trade finance, and actively enabling communication between young exporters and trade agents. However, this protocol is the first step to ensure that youths have a chance at exports.

In five years, one has to congratulate African governments and the Au for the progress that has been made so far. Now, the foundations for free trade are set and countries can soon begin trading wholly under the African Continental Free Trade Area (AfCFTA). Now that the foundations for trade have been set and the “Guilded Trade Initiative” is operational with over seventeen countries trading under it, Africa is set to begin trading with zero tariffs.

“If Intra-African Trade is to success, we must understand where we are regarding implementation and what we must do to accelerate exports and imports under the AfCFTA. We cannot promote what we do not understand”

Conclusion

Countries must ensure that businesses and the private sector are knowledgeable about trading procedures under the AfCFTA. After all, the private sector, not the government, will accelerate the implementation of the African Continental Free Trade Area (AfCFTA). While we stay happy and excited about the prospect, we should know where we stand. After all, we cannot promote something we do not understand.

One thing is worth reiterating, regardless. Free trade will boost Africa’s economic development, support real income growth, and boost inclusive development. However, this will not be possible without quantifiable policies that seek to upskill individuals, businesses, and groups to ensure faster and greater competitiveness over the medium term. Anything short of quantifiable metrics could compromise the acceleration of tariff-free trade and the integration of value chains.

The foundations have been set with the finalizing of the trade protocols; Now, we must understand what they mean for us locally, adapt regulations and legislation where necessary, and create a framework for businesses and individuals to trade effectively. The African continental free trade area will not be executed if we do not understand how our tariff schedules are implemented. Free trade is about people, but for the development gains to become a reality, Africans must understand it and engage in how it is implemented.

We cannot advocate for free trade if we do not understand it

Even as ports and domestic legislation are being tweaked to accommodate the AfCFTA, it is important to take stock of where we are after five years. After being approved at the regional level, trade protocols must be instrumentalized at the local level, which will involve cross-agency work and careful processes that count for the heterogeneity in the process without making trade even more cumbersome.

CEPI recommends that a step-by-step guide be put up on the Ministry of Trade, Customs and the Cameroon National Shippers Association to ensure that all traders know how to export under the AfCFTA. Although these will be provisional, it will provide a bridge to full implementation once all trade protocols have been approved and implemented.

Henri Kouam

Executive Director

Cameroon Economic Policy Institute (CEPI).

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