African businesses must step up to make Continental Free Trade Area work

Africa is moving closer to continental unity, more than at any time in its history, with the exception perhaps of the founding in 1963 of the Organisation of African Unity, the precursor to today’s African Union.

Africa is moving closer to continental unity, more than at any time in its history, with the exception perhaps of the founding in 1963 of the Organisation of African Unity, the precursor to today’s African Union. Tomorrow, Wednesday 21 March 2018, African heads of state and government will sign an agreement establishing the African Continental Free Trade Area (AfCFTA). This is a huge step by any measure.

Barriers to trade and investment and free movement of people are expected to come down, over time, of course. With this, Africans should begin looking at opportunities within the continent in business and employment. In particular, African’s young people will not have to face the perils of crossing to other continents through hostile or dangerous areas in search of a better, or suffer the indignity of being turned away at the borders, imprisoned or enslaved.

That, of course is the brighter, hopeful side. But if the AfCFTA works, that should be some of its dividends. The other, more obvious, is increased intra-African trade.

The AfCFTA has been long in the making. African countries have been chipping away at the barriers for a long time, and it was only a matter of time before they finally gave way.

Regional economic communities have been in existence for a while now. Their starting point has always been the creation of a common market and customs union. Other agreements are then added to this base.

Eastern and southern Africa has had a long experiment in operating a free trade area. It started as a Preferential Trade Area in the 1970s and then changed to the Common Market for Eastern and Southern Africa (COMESA).

In more recent times, we have seen the relaxation or abolition all together of visa regimes by a growing number of African countries.

There has been greater integration in the telecommunications industry with the creation of one network area operations in a number of places.

At the January African Union Summit, an open skies initiative, known as the Single African Air Transport Market (SAATM) was launched.

And now the big one - the African Continental Free Trade Area – is here.

Of course, the AfCFTA will not be operational immediately. There will be delays. Some have to do with issues of ratification by national legislatures, some of which are notoriously slow about these things. Others have to do with some interests having to come to terms with the new trade arrangements. Then there are technical and bureaucratic issues to get familiar with.

There might even the feeling of resignation that this is yet another of those wonderful African plans that never get implemented.

Still, there is a sense of optimism that it will be different this time.

For a start, there has been ample time to negotiate the sticky points.

Second, the hard economic reality compels African countries to come together because existing national markets are small and fragmented, and on their own cannot support any meaningful industrialisation and sustainable growth, and also be able to compete globally. Besides, they are vulnerable in an era of creeping protectionism.

Third, there is the example provided by the various regional economic communities across the world that integration works.

But even with these compelling reasons for the AfCFTA to work, we still have to overcome obstacles of the past to greater unity.

In some cases, some of our countries have allowed themselves to be exclusive markets of other countries, especially their former colonial overlords. These have to liberate themselves.

In other cases, we have to outgrow narrow national interests or the personal egos of leaders that make some countries look inward and build walls around themselves.

African unity has been politically driven and that perhaps explains why it has been slow. It is about time, African citizens pushed their leaders to move faster. In particular, the private sector, which stands to gain from the continental free trade area, must show greater interest in matters of economic integration. It needs to grow and become a big and influential constituency able to exert pressure on political leaders.

Treaties are good but they need people to make them work. And so, African businesses must step up and push for the quick implementation of the AfCFTA. We have seen it elsewhere – business interests have a big input into into important national or regional economic strategies. They should do that here as well.

The views expressed in this article are of the author.

 

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