1.0 Introduction

The African Continental Free Trade Agreement (AfCFTA) is
a trade agreement in force between 27 African Union member states.[1] It
was signed in Kigali, Rwanda, on March 21, 2018. As of July 2019, 54 of the 55
African Union states had signed the agreement, with Eritrea the only country
not signing the agreement. Of these member states, 27 have deposited their
instrument of ratification.[2] As
of fact, Nigeria was one of the last countries to sign the agreement. 

Nigeria has a population of 200 million people and is
Africa’s most populous country. Nigeria’s population exceeds that of the second
and third most-populous countries in the ladder, Ethiopia and Egypt combined, each
with its population around 98 million. 

With a nominal GDP of US$376 billion, which represents
17% of Africa’s GDP, Nigeria is just ahead of South Africa which accounts for
16% of Africa’s GDP. Because Nigeria is so significant in terms of its
population and economy, its absence at the initial signing of the agreement was
particularly conspicuous. South African President, Cyril Ramaphosa,
underscored that in comments made on the 12th of July 2018, that; “The
continent is waiting for Nigeria and South Africa. By trading among ourselves,
we are able to retain more resources in the continent

Initially, 44 countries signed the agreement on 21
March 2018. Nigeria was one of 11 African Union Nations to abstain from
signing. At the time, the Nigerian President, Muhammadu Buhari, said that
Nigeria could not do anything that would undermine local manufacturers and
entrepreneurs.[4] The Manufacturers
Association of Nigeria, which represents 3,000 Nigerian manufacturers, praised
the decision to back out of the agreement. The Nigerian foreign minister
tweeted that more domestic consultation was needed before Nigeria could sign
the agreement.[5] Former president Olusegun
Obasanjo said Nigeria’s delay was regrettable.[6]
The Nigeria Labour Congress called the agreement a “renewed, extremely
dangerous and radioactive neo-liberal policy initiative
“, suggesting
increased economic pressure would in turn pressure workers into migration under
difficult and unsafe conditions.[7]

On 21 July 2018, five more nations signed the
agreement, including South Africa. At that time, the Nigerian government
emphasized its non-participation was a delay, not a withdrawal, and promised to
soon sign the agreement.[8] As
the foreign minister had earlier emphasized, the Nigerian government intended
to consult further with local businesses in order to ensure private sector
buy-in to the agreement.[9]

Nigeria’s president announced on 2 July, 2019 that the
country would sign the AfCFTA in Niger the following week and this promise was
delivered as Nigeria signed the AfCFTA on 7 July, 2019.[10]


2.1 What does AfCFTA Mean?

The proposed Continental Free Trade Area for Africa is
a market integration agreement that presents an equal opportunity open market
to all participating countries in the region. The plan is to substantially
remove obstructions and barriers to movement of goods and services across the
continent at the initial implementation stage with the hope of progressing into
a customs union with free movement of capital and business persons.[11]

The agreement aims to provide for a good reduction or
elimination of customs tariffs on qualifying imports between member countries.
However, unlike other free trade agreements, AfCFTA provides that the signatory
countries have agreed to be bound by the agreement even though the text of the
agreement has not yet been finalized. For example, the “rules of origin”
provisions under the agreement are still being negotiated, but reportedly these
negotiations are at an advanced stage. Similarly, negotiations for reductions
or elimination of customs duty on 90% of products are in process but not yet

The agreement comes at a critical moment for Africa.
For centuries Europe, the United States, and more recently China have stripped
the continent of its raw materials. Today, more than 75% of Africa’s external
exports are extractives, namely oil and minerals. Increasingly, African nations
hoping to secure sustainable economic growth are shifting away from the
volatility associated with extractive exports towards industrialized goods.
While overall intra-African trade is minuscule, 42% of it consists of
industrial goods and this number is expected to grow under AfCFTA. A focus on
industrial goods promotes African industrialization and the advancement of its
manufacturing sector, providing employment opportunities for the continent’s
booming youth population. Amidst growing U.S.-China trade tensions and China’s
efforts to decrease its dependency on export markets, some are betting that
Africa is a prime successor to become the manufacturing hub of the developing
Underlining the above reality, Judd
told CNBC that “This agreement underlines how Africa is
moving in a different direction than other regions in the world.
” He
further added that “The continent’s leaders are embracing integration, while
some global counterparts have turned away from multilateralism


The primary aim of the Agreement is to achieve an
increased volume of trade amongst African countries. Trade remains a key driver
in the economic advancement of nations and getting intra- African trade right
may be the much-needed catalyst to stir the African economy up. There is no
doubt that it will bring about the much-needed economic expansion of African
countries by taking the focus off extractives to other non-mineral products. It
is believed that AfCFTA will be a catalyst for the diversification of the
African economy. It is also expected that it will bring about a consciousness
for African economies to make a shift towards building a production-based
continental economy as no nation would want to be entirely on the consumption
scale of the competition. This will create more job opportunities that would
further absorb the millions of unemployed young Africans.[15]

According to the Agreement Establishing the African
Continental Free Trade Area, the general objectives of the AfCFTA are to:

A) create
a single market for goods, services, facilitated by movement of persons in
order to deepen the economic integration of the African continent and in
accordance with the Pan African Vision of “An integrated, prosperous and
peaceful Africa” enshrined in Agenda 2063;

B) create
a liberalized market for goods and services through successive rounds of

C) contribute
to the movement of capital and natural persons and facilitate investments
building on the initiatives and developments in the State Parties and RECs;

D) lay
the foundation for the establishment of a Continental Customs Union at a later

E) promote
and attain sustainable and inclusive socio-economic development, gender
equality and structural transformation of the State Parties;

F) enhance
the competitiveness of the economies of State Parties within the continent and
the global market;

G) promote
industrial development through diversification and regional value chain
development, agricultural development and food security; and

H) resolve
the challenges of multiple and overlapping memberships and expedite the
regional and continental integration processes.[16]


Looking at the promising new African free trade area,
there is an effulgent future for Africa. The agreement is considered critical
to growth and job creation for Africa and its 1.27 billion people. Perhaps, the
issue of poverty engulfing Africa will finally be, if not completely taken care
of, reduced.

The removal of tariffs and non-tariff barriers is
likely to increase intra-African trade by 52.3% by 2020 as estimated by the UN
Economic Commission for Africa (ECA). This will increase employment, facilitate
better use of local resources for manufacturing and agriculture, and increase
access to cheaper products. Analysts say that successful implementation of the
trade pact has the potential to transform the continent, arguing that it would
create a market of about 1.27 billion people with a combined gross domestic
product (GDP) of $2.14 trillion. This market is expected to grow to about 2.5 billion
consumers by 2050.[17]

The AfCFTA free-movement rules will also allow people
to access government-funded health services in any member country. This will
increase the number of foreign patients seeking treatment in countries with
relatively strong health-care systems, such as Kenya and Uganda. The new
free-trade area is also expected to drive growth in private health care,
including medical tourism. For example, as demand for cancer treatment soars,
visa-free travel will enable people in the 15 African countries without
radiotherapy services to seek care elsewhere.[18]

The praises of AfCFTA echoes beyond Africa as Arancha Gonzalez Laya, the Executive
Director of the International Trade Centre (ITC), while speaking during a
session at the World Economic Forum on Africa, developed with the Forum’s
Platform for Shaping the Future of International Trade and Investment, said
that “We now have leaders of 54 countries putting their neck on the line for
this agreement. It’s a game-changer. There’s much more political energy today
than there has ever been on integration.


Just as there are pros and cons to everything, and
nothing that exists in the world is perfect, the AfCFTA also has its downsides.
Agreeably, AfCFTA is an opportunity for countries and companies to help each
other grow, still, trade liberalization has the potential to damage the poorest
within those countries, which is why it is important for the AfCFTA to have
supportive policies as the government will deem necessary for its smooth

Furthermore, its possible negative impact on African’s
health should not be ignored. Private health services and medical tourism
induce clinicians to migrate from poorer to richer countries, and from public
to private health care. This results in weaker, understaffed public-health
systems, especially in poorer countries. Moreover, influxes of foreign
clinicians will irk local medical professionals by increasing competition for

There are also worries that big pharmaceutical
companies will push for restrictions on imports of generic drugs into the
AfCFTA, as happened in Guatemala after the Central America Free Trade Agreement
took effect. Such restrictions push up the cost of these drugs and hurt poor people
the most.

Free movement of people also increases the risk that
diseases will spread across borders, especially given weak disease-surveillance
systems and the instability of some African countries. The continuing Ebola
epidemic in the Democratic Republic of Congo is a pressing concern. Other
dangerous infectious diseases, such as cholera, may also spread farther and
faster. With respect to this issue, global health and development stakeholders
need to become more aware of not only the opportunities but also the challenges
of AfCFTA implementation for health market expansion, universal health coverage
and health security, so that policies can be made to combat its possible
negative outturn. 

Trade liberalization can also pose some challenges for
governments in promoting competition in local markets as some firms that are
taking advantage of economies of scale may grow faster than others and capture
dominant positions in markets. In order to ensure a smooth transition during
these episodes, complementary policies such as consumer protection and
competition policies need to be put in place.[21]

Some arguments against the AfCFTA is that it is in
contrast with the principles of state sovereignty. However, in contradiction to
concerns about loss of sovereign power, some others argue that the AfCFTA as
currently proposed is about economics, not politics. AfCFTA is a basic trade
agreement. Also, trade agreements have numerous precedents all over the world,
none of which has been directly implicated in the sort of collapse in
sovereignty being alluded to.[22]


The negotiation
stage is relatively the easy part of the puzzle; the real challenge is in the
implementation of the AfCFTA.
If the AfCFTA is to achieve its
objectives of boosting intra-African trade and industrial competitiveness
across the continent, African countries must not only conclude and ratify the
AfCFTA Agreement, they must also implement it. That means domesticating the
agreement as a national law and ensuring that all relevant government agencies
are prepared for, and able to apply the required changes, and that they
actually do so. These steps cannot be taken for granted.

For one reason or another, many African countries have
not properly implemented their regional trade agreements. As a result,
intra-regional trade in Africa is still plagued by high tariffs, numerous
non-tariff barriers and other complications arising from the patchwork of
partially implemented regional trade agreements with overlapping memberships.

It is imperative for the government of nations within
the continent to set things in order as are necessary for the successful
execution of the agreement. For example, improving the electricity situation
within the state and creating a suitable environment enabling industries to not
only survive but to thrive.

The fate of the
AfCFTA ultimately depends on African leaders following through on the high
expectations they have set for the AfCFTA. They must show progressive
leadership and commitment to ratifying and implementing the AfCFTA (and their
other regional trade agreements), and not just under the bright lights of AU
Summits. This also means engaging meaningfully with the private sector and
African citizenry, as they are the ultimate intended beneficiaries of all this,
after all. This will be crucial to ensure the AfCFTA avoids the implementation
gap into which so many African agreements have fallen.[23]
The credibility of African integration is at stake. Therefore, complacency is
not an option. It is hoped, after all is said and done, that the enforcement of
the AfCFTA will promote economic growth and its advantages would subsequently
outweigh whatever apparent disadvantages.

Written by:

Adeniran Oluwabukunmi.

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