Trading Under AfCFTA Treaty Comes To Effect

Africa | Commentary January 2, 2021

Trading under the landmark African Continental Free Trade Area (AfCFTA) treaty came to effect on January 1, 2021. That implies that African countries that have signed and ratified the treaty can from that date begin trading under the treaty’s trading rules. The latter include, among others, removal of 90% tariffs on all goods.

AfCFTA treaty was launched in 2018 in Kigali, Rwanda. The treaty has been signed by 54 of Africa’s 55 countries, making it the second largest free trade treaty in the world after the World Trade Organization (WTO). Only the tiny Eritrea is not a signatory. As of December 5, 2020, 34 countries had ratified the treaty. The countries include: South Africa, Nigeria, Kenya, Uganda, Rwanda, Ghana, Ethiopia, Egypt, Ivory Coast, Cameroon, Namibia, Mauritius, Senegal, Zimbabwe, Tunisia, and Angola, among others.

AfCFTA creates a huge market estimated at over $3 trillion. Trading under the treaty is expected to significantly boost the inter-African trade that is currently accounts to only 16% of the continent’s total trade.

As trading under AfCFTA treaty came to effect, there have been doubts from some quarters that envisaged inter-regional trade in Africa may face serious challenges and even hampered by poor infrastructure facilities like roads, railways, ports, etc. However, such doubts may be far-fetched and probably irrelevant. We will tell you why.

In the past several decades, Africa has witnessed massive improvement and construction of new infrastructure facilities than never before in its history. For instance, new electrified cross border standard gauge railways have been built like the Addis Ababa-Djibouti railway, or are under construction like the Dar es Salaam-Kigali/Bujumbura railway. Also, ports like those Dar es Salaam in Tanzania and Mombasa in Kenya have been massively improved to world class standards. Furthermore, new state-of-the-art airport terminals have mushroomed almost every in the continent. In addition, new cross border bridges have been constructed like the Unity Bridge over Ruvuma River on the Tanzania-Mozambique border or are under construction like nearing completion Kazungula Bridge, a road and rail bridge over Zambezi River on the Zambia-Botswana border.

Even existing and in good condition, is the iconic TAZARA, a modern railway built in the 1970s that spans 1860 kilometres from the port of Dar es Salaam in Tanzania to Kapiri Mposhi in Zambia where it connects to the Southern African railway network of the same gauge. That means goods and passengers could be transported from Cape Town in South Africa to Dar es Salaam without need for change of wagons. Also, running almost parallel to TAZARA is a paved immaculate highway called TANZAM Highway in good condition.

Accordingly, inadequate infrastructure facilities may not have been the problem behind lack of inter-regional trade in Africa hitherto AfCFTA, but rather lack of political will for such kind of trade, emanating from various factors including protectionism and even sheer destructive jealousy among countries. Some countries will rather enrich their former colonial masters than their fellow African neighbors! It is probably because of this political stance, that some of existing great infrastructure facilities like those mentioned above have reportedly been operating far below their carrying capacities due to lack of goods and passengers, with some facilities turning into white elephants. If AfCFTA treaty means increased political will by African states that have ratified the treaty, toward trading with each other, availability of infrastructure facilities would not therefore be an obstacle, at least in many parts of the continent. Instead the implementation of the treaty would be the dawn of increased utilization of Africa’s great existing, improved, and new cross-border infrastructure facilities.

_________________

© 2015 - 2021 Africauptodate. All Rights Reserved