Tariff removal under AfCFTA can increase intra-African trade by 52%

Trade experts across the continent have expressed optimism about the growth of intra-African trade if the African Continental Free Trade Agreement (AfCFTA) are properly implemented.

Indeed, experts at the United Nations Economic Commission for Africa (ECA) expressed conviction that the CFTA can also have a positive impact on people’s welfare and contribute to Africa’s industrial transformation.

Meanwhile, the fifth meeting of African Union Ministers of Trade (AMOT) chaired by the Minister of Trade and Investment of Nigeria, Dr. Okechukwu Enelamah adopted the legal instruments constituting the African Continental Free Trade Area (AfCFTA) namely, the Agreement Establishing the AfCFTA, the Protocol on Trade in Goods, the Protocol on Trade in Services and, the Protocol on Rules and Procedures for the Settlement of Disputes.

The AMOT meeting also adopted the Transitional Implementation Work Program which includes a built-in agenda for the finalization of some annexes to the Protocol on Trade in Goods and other arrangements for the operationalization of the AfCFTA.

These instruments are to be recommended to the African Union Executive Council for adoption by the Assembly of Heads of State and Governments at the extraordinary Summit that is scheduled to be held in Kigali this week to sign the legal instruments and mark the conclusion of the first phase of the AfCFTA negotiations.

Jamie Alexander MacLeod, a fellow in the African Trade Policy Centre of ECA, says that by removing tariffs the AfCFTA can increase intra-African trade by 52%, and that by additionally reducing non-tariff barriers it could double this trade.

He presented ECA’s analysis at a policy dialogue held in Kigali today, involving Rwandan officials, development partners and the diplomatic corps, to discuss regional integration in Africa and the AfCFTA, ahead of the African Union (AU) summit on March 21st at which the AfCFTA will be signed.

Introducing the discussion, Andrew Mold, the Acting Director for the ECA in Eastern Africa, insisted on the importance of the AfCFTA, as a “major milestone towards making the pan-African aspiration a reality”.

He explained that despite expected losses in terms of tariff revenues (estimated at about 4 billion USD for the continent), the benefits will be more than four times higher, especially through lower prices for consumer goods.

MacLeod stressed that intra-African exports are more diversified, and hence more useful to Africa’s development, than Africa’s trade with outside the continent, which comprise mostly extractive products such as fuels and minerals. Boosting intra-Africa trade will result in longer-term growth, higher foreign investments and contribute to the continent’s industrialization.

According to MacLeod however, there are further challenges ahead in bringing about the AfCFTA, with significant implementation issues faced by Member States. First, they must complete the AfCFTA Implementation Roadmap, including preparing schedules of commitments in goods and services.

The Manufacturers Association of Nigeria (MAN) had last week advised government to cautiously carry out the signing of African Continental Free Trade Area (CFTA) to prevent unintended consequences.