The African Continental Free Trade Area

African people

The African Continental Free Trade Area (AfCFTA) is set to be the largest free-trade area ever established. It encompasses 54 out of 55 African countries and over 1.2 billion people. But will it actually boost Africa-centred development? And what impact will it really have on the continent’s people?

Supporters of the deal argue that it could enhance cooperation and collaboration between African countries, while facilitating growth and development; and that greater Pan-African integration could help change Africa’s unequal economic relationship with the rest of the world, breaking its dependence on foreign powers and weakening the neo-colonial system of exploitation.

Despite the hope and promises that the AfCFTA may bring, however, there are many challenges to overcome, particularly in the area of workers’ rights and environmental protection. This is due to AfCFTA’s potential to intensify existing inequalities across the continent and exploit already weakened institutions in order to maximise profits for the rich and multinational corporations.

From colonialism to independence

Since 1885, much of Africa’s internal trade and development has been restricted. European powers carved up the continent, restricting and destroying long-established trade networks between various states, empires, kingdoms, tribes, and ethnic groups following the Berlin Conference. People refer to this today as the Scramble for Africa.

As colonies, many African states were trapped and tied into being exporters of primary goods, extracting and providing raw materials for industrialised countries in the north at rates often set by the colonising powers . Even when independence was achieved in the 1960s, this pattern of trade changed very little for many African countries. Because some leaders, under Cold War conditions, opted (and at times were forced) to remain in the sphere of Western influence.

Efforts to break free

Other leaders sought greater autonomy. Thomas Sankara of Burkina Faso, for example, wanted to end his country’s economic dependence on France. Instead, he worked to build the necessary infrastructure for economic diversification (through greater trade and cooperation with West African neighbours). While there are legitimate criticisms of his time in power, he also oversaw significant advances from education to healthcare. Opponents assassinated him in 1987; and they then imposed austerity to return into the West’s good books.

Kwame Nkrumah of Ghana, meanwhile, had a grand vision of Pan-Africanism in all spheres – from a cultural and political vision to an economic vision of greater African cooperation and trade in what he famously conceptualised as the “United States of Africa”. He gained popularity via the independence struggle and his infrastructure, education, and health programmes. But amid increasingly authoritarian rule and economic problems, coup plotters in the military overthrew him in 1966, with US support.

Congolese anti-colonial leader Patrice Lumumba also called for economic independence. But after only a few months in power, “two inter-related assassination plots by American and Belgian governments” ensured that he wouldn’t get the chance to pursue this. A brutal, corrupt, Western-backed dictatorship would rule the country until 1997. Despite DR Congo’s vast natural wealth, it continues to suffer “one of the most complex and long-standing humanitarian crises” in the world.

In short, the visions of greater economic independence and regional cooperation failed to manifest. Through a combination of Western-backed military interventions, coups, political instability, assassinations, corrupt and incompetent leadership, increasing debt and economic decline, much of these Pan-African ideas disappeared with the leaders who supported them. One economic result was a continent where today only 16.6% of its trade is domestic (compared to 59% for Asia and 68% for Europe).

Steps towards AfCFTA integration

In recent years, however, the subject of increasing trade and cooperation among African states has resurfaced. And the continent has taken serious steps to make this vision a reality. In the 2010s, the African Union (AU) sought to foster and manage this economic integration. Following the 2012 summit in Addis Ababa, Ethiopia, leaders agreed to create a new continental free trade area by 2017. At the 2015 AU summit in Johannesburg, South Africa, members agreed to start negotiations comprising of ten sessions between 2015 and 2018.

At the 21 March 2018 summit in Kigali, Rwanda, 44 countries signed the AfCFTA with the Kigali Declaration, as well as the Protocol on Free Movement of Persons (aiming to enhance the free movement of people across the continent). The AfCFTA officially started on 1 January 2021.

What is the AfCFTA? And why is it important?

The AfCFTA is the largest free-trade area, by number of countries, in the world since the formation of the World Trade Organization in 1995. South African president Cyril Ramaphosa celebrated it as “the start of a new era of trade between African countries”. And Wamkele Mene, the secretary general of the AfCFTA secretariat, told the FT:

We want to move Africa away from this colonial economic model of perpetually being an exporter of primary commodities for processing elsewhere

The trade agreement covers a market consisting of over 1.2 billion people, and with a combined gross domestic product (GDP) of $3tn. 54 of the 55 AU member states have joined the AfCFTA; Eritrea is the only African country not to have joined.

The agreement will work towards a continent-wide customs union, the elimination of tariffs on 90% of goods traded within Africa, the facilitation of free movement (of people and capital), the stimulation of external investment, and the reduction of non-tariff barriers. According to the UN Economic Commission for Africa, the AfCFTA could potentially increase intra-African trade by over 50%. The World Bank, meanwhile, believes that by 2035, the agreement could boost income by $450bn for Africa and $76bn for the rest of the world.

AfCFTA’s challenges 

Despite AfCFTA’s promises, there are a number of structural challenges that make its implementation difficult across the continent. For example, there’s huge diversity in development between African countries. AfCFTA states have the highest difference in income disparity of any regional free-trade agreement, with over twice the levels of inequality seen in other trade blocs like ASEAN in South East Asia and CARICOM in the Caribbean. More than 50% of Africa’s total GDP comes from just three countries – Nigeria, South Africa and Egypt – which could lead to a disproportionate amount of leverage and influence concentrated in just three countries.

Local producers are also likely to lose sales to foreign suppliers due to competition resulting from lowered tariffs on imported goods. Another issue to consider is that workers in poorer countries could be forced to work in adverse working conditions as competition between industries intensifies. Indeed, the AfCFTA is at its core a capitalist project whose focus is to stimulate growth and competitiveness among African industries. So without adequate regulations, trade union protections and workers’ rights being enshrined in the agreement, people across the continent could be forced to work long hours with poor conditions, and to live in accommodation without basic amenities such as electricity. Some workers could also be forced to accept lower wages and be prevented from joining unions.

Concerns about the deal

In short, the agreement could exacerbate exploitative employment practices across Africa, if it’s not properly engaged with and managed. And this is part of why the Nigeria Labour Congress (NLC) described it as a “renewed, extremely dangerous and radioactive neo-liberal policy initiative”.

In fact, Nigeria and South Africa (the continent’s two largest economies) initially didn’t sign the AfCFTA due to opposition from stakeholders. The Manufacturers Association of Nigeria argued against the agreement due to concerns that it could create high unemployment. South Africa’s Cyril Ramaphosa, meanwhile, had to consult with the National Economic Development and Labour Council (the vehicle for cooperation between unions, business, community groups, and government) regarding its concerns about the deal.

Another issue is the possible pressure that increased competition would place on the environment. It’s possible that some companies will ignore environmental laws and regulations when manufacturing products or disposing of waste. It’s also possible that many small and medium-sized businesses (SMEs) would attempt to cut costs in order to survive and grow, which sacrifices the environment and puts it at greater risk.

Currently, many countries in Africa are struggling to apply useful environmental legislation on the ground despite successes in putting together policies in response to various environmental crises. However, environmental policies are often dictated by countries in the Global North; and this means they often fail to account for the livelihoods of the poorest communities that have been pitted against multinational companies operating across the continent. At present, it’s unclear how the AfCFTA would resolve these existing issues without amplifying them.

Issues to consider with economic development in Africa

It’s worth noting that the context that AfCFTA is occurring in is one in which the market has overtaken the role of the state. Over the last 25 years, many African countries have undermined or reduced the role of the state in order to further initiatives that focus on boosting economic growth and development. This is largely due to the neoliberal agenda and the ‘Washington Consensus’ prescriptions that came through the World Bank and the International Monetary Fund (IMF). These emphasised lower regulation and greater privatisation, in turn weakening the state’s ability to provide social programmes. According to economist Dambisa Moyo, this situation increases the influence of non-state actors such as NGOs, and countries’ dependence on these, while facilitating corruption that further exacerbates poverty.

South Africa’s Alternative Information & Development Centre warned in 2019 about the “loss of sovereignty” and “lack of transparency” surrounding the AfCFTA. And it stressed: “such agreements have been shown to increase wealth inequality, only serving to intensify the profit-making of the wealthy”. It also said these deals “remove states’ ability to formulate their own legitimate paths to development, cementing the current model of raw material and low-value goods exporting coupled with reliance on imports of food and value-added goods”. And it made the criticism that:

There has been little to no input from civil society, social movements, or the communities that will be affected by the free trade area.

One key worry, meanwhile, was that the deal “may intensify the ‘race to the bottom’ between working classes on the continent”.

Some debates have emphasised the need for sustainable models of development, especially amid the current climate crisis and just over a decade on from the 2008 financial crisis. The current pandemic, meanwhile, has placed a hyper-lens on neoliberal approaches to the economy that are at odds with public health and the natural environment. And there may be increasing pressure from ordinary people for governments to address these questions as the consequences of the AfCFTA become apparent.

Watch this space

Will the AfCFTA fit in with the visions of people like Nkrumah and Sankara? Or will it just be an evolution of the current neoliberal and neocolonial system that has afflicted African people for decades?

With increased cooperation between African countries, the potential for millions of people to escape poverty is certainly there. But equally important is that the deal could push millions more into poverty if they can’t beat their neighbours on an uneven playing field. Africa may ‘develop’, but towards growth at the cost of the environment and a system where inequality becomes an entrenched, normalised feature that destroys any ability for Africans to have autonomy over their society’s economic direction. Thus, in a way, the AfCFTA could complete the work of the 1885 Berlin Conference in fully integrating the continent and its people into a neoliberal economic order.

Lead contributor Lyndon Mukasa.

Main article image via Owaemmanuel