The AfCFTA: Africa’s Answer to Development?

By Jasper Gentry

“This is the moment for the African continent” stated South Africa’s incumbent president, Cyril Ramaphosa, in reference to the landmark ratification of the African Continental Free Trade Area (AfCFTA) in 2019.

The African Continental Free Trade Area (AfCFTA) is Africa’s latest answer to its development. The AfCFTA, the world’s largest free-trade area implemented since the establishment of the World Trade Organization, aims to increase intra-African trade by promoting deeper trade liberalization and regulatory harmonization; its implementation marks a new era for Africa. Although only in its nascent stages, the AfCFTA has already had profound impacts on the continent.

The AfCFTA, ratified by 53 African countries (bar Eritrea), is projected to generate $3.4 trillion in Gross Domestic Product, increase real incomes by 7%, and increase trade by up to $70 billion. The area will make the most gains in the manufacturing and services industry whereby it hopes to ignite an “African industrial revolution”. The area has already made steps to remove 90% of tariff barriers across Africa over the next 9 years, and 97% of tariffs over the next 12.

However, two significant risks threaten the successful implementation of the AfCFTA.

First, the free trade area comes at a time of significant geopolitical instability. The Russia-Ukraine war, as well as domestic conflicts in Sudan, the Democratic Republic of Congo, and Ethiopia, threaten to undermine the AfCFTA’s implementation. Wars are historical annihilators of free trade and growing regional tensions may compel governments to take precautionary actions, such as implementing protectionist policies, that run contrary to the objectives of the AfCFTA. The African Union must guarantee the continued protection of the AfCFTA in spite of security challenges if it is to ensure success.

Second, Non-Tariff Barriers (NTBs) also threaten to undermine the implementation of the AfCFTA. NTBs are seen as any measure, other than customs tariff, that act as a barrier to trade. NTBs are difficult to quantify and measure, meaning they are very tough barriers to target. It is likely NTBs will remain prominent in Africa for years if not decades. Instead, it is key that the AfCFTA ensures that NTBs do not interfere with the progress made in reducing tariffs.

However, the AfCFTA’s implementation has been proven a success so far.

In April 2023, Kenya’s government signed a $200 million deal with British-based investment group, United Green. The deal, which is set to support Kenya’s rural agricultural communities, unequivocally shows that the AfCFTA is already attracting mass foreign investment. If the AfCFTA can build upon this, and successfully negate its risks, it can be a monumental success for African development.