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Recap: Africa Continental Free Trade Area: challenges & opportunities

We had the discussion on Africa Continental Free Trade Area: challenges & opportunities (‘AcFTA’) on 27 August 2020. For the discussion we had panelists from Kenya, South Africa and Nigeria. Here are the highlights from the discussion.

What is AcFTA?

AcFTA is intended to be a single market for goods and services supported by free movement of persons across Africa. The AcFTA aims to boost inter-Africa trade. Of note, inter-Africa trade is significantly low. The ACFTA is likely to boost economic growth and reduce poverty within Africa.

When was AcFTA launched?

AcFTA was launched in July 2019. It was meant to be implemented in 2020 but this was affected by the COVID situation.

Skepticism around AcFTA

Some countries are concerned that there will be possible crowding out of companies currently operating in their markets. Additionally, some countries are skeptical that the benefits to be realized from AcFTA will go to some and not all countries. Hence, there is fear that AcFTA will create ‘super-powers’ within Africa.

What’s the potential gains from AcFTA

As a result of ACFTA inter-Africa trade could be boosted by over 50%. This is where tariffs and non-tariff barriers are eliminated.

What challenges face the full potential gains from AcFTA?

African countries are largely raw material exporters. Hence, trade among the countries may be limited. Moreover, a number of non-tariff barriers exist within Africa like, lack of political goodwill and social political issues. Another big issue, the many existing Regional Economic Communities within Africa that put in question the loyalty of countries to AcFTA over their existing memberships.

Other issues likely to negatively impact the AcFTA are poor infrastructure development (e.g. roads & railway), competition among countries, xenophobic tendencies, and challenges on trade logistics. All these issues are likely to impact movement of goods and people under the AcFTA.

Other concerns

It is not clear how enthusiastic some African countries are with the AcFTA. As at the date of the discussion only 30 of 54 African countries had signed, ratified and dropped the AcFTA instruments with the Africa Union. Moreover one country has not signed the agreement in its entirety.

You can watch the full discussion on ‘Africa Continental Free Trade Area: challenges & opportunities’ on our YouTube Channel here.

What’s next?

We are having a second round of discussion on AcFTA on 8th of October 2020. In this second round we will explore, the social political challenges, economic challenges & other non-tariff barriers that are real issues likely to affect realization of the AcFTA. We will stream the discussion on our Facebook page. You can also join the live discussion here.

Please look out for other future discussions here.

If you have any legal questions of AcFTA please contact us and we will direct you to the relevant person for assistance. If you have any tax questions on AcFTA please contact the tax team here.

Thank you!



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