Friday 19 Jul 2019

West Africa in the African Continental Free Trade Area

African leaders launched the operational phase of the new African Continental Free Trade Area (AfCFTA) at the 12th Extraordinary African Union Summit on 7 July in Niamey, Niger. The 54-nation trade bloc is set to become the biggest integrated market worldwide, uniting some 2.5 billion people by 2050. Members have committed to eliminate tariffs on most goods, which is expected to increase trade in the region by 15-25% in the medium term. The African Union’s goal is to make the free-trade area instruments operational by July 2020. To date, 27 countries have ratified the AfCFTA instruments.
The official launch of the new AfCFTA at the Niamey summit is a diplomatic success for Niger President Mahamadou Issoufou, a designated “AfCFTA Champion.” Niger is in the spotlight, illustrating its capacity to host some 3 000 delegates and experts from across the continent. More than 30 heads of state and government participated in the event. Ghana has been chosen to host AfCFTA’s permanent secretariat, placing the country at the heart of the continental integration process. Nigeria – along with Benin – eventually signed the AfCFTA agreement a few hours ahead of the summit. The Nigerian government was for a long time reluctant to support regional trade liberalisation and faced domestic opposition. Some Nigerian officials expressed concern that the country could be flooded with low-priced goods, which would impede the development of local manufacturing and farming. As the continent’s largest economy, Nigeria’s participation in the free trade area is critical for its success.
The AfCTA agreement acknowledges existing regional economic communities “as building blocs towards the establishment of AfCFTA”. Within the ECOWAS area, AfCFTA will add an additional layer to existing regional trade agreements. The ECOWAS area has the largest number of legal agreements, including the ECOWAS Protocol on the Free Movement of Persons and Goods (1978) and the ECOWAS Trade Liberalisation Scheme (ETLS - 1979), the main operational tool for promoting West Africa as a free trade area. However, in practice, it has been challenging to implement these agreements. AfCFTA will mainly change the relationship between ECOWAS countries and non-member countries.
In line with the aspirations of Agenda 2063, the role of AfCFTA is to liberalise trade among all African countries. According to current estimates, intra-regional trade in Africa accounted for only 17% of exports in 2017 versus 59% in Asia and 69% in Europe. However, official statistics fail to account for the true extent of regional markets and these figures do not reflect the large amount of informal trade within Africa. AfCFTA is an opportunity to deepen economic integration beyond West Africa.

By Laurent Bossard, SWAC Secretariat Director