ZLECA: Is Africa Ready for Free Trade?

Delayed by Covid-19, the implementation of the African Continental Free Trade Area (AfCFTA) was announced for January 1, 2021 by the Assembly of Heads of State and Government of the African Union (AU) . But the fundamental question is whether Africa is ready to start this integration process which is one of the major flagship projects of the organization’s 2063 agenda.

Less than 48 hours from the operationalization of the African Continental Free Trade Area (AfCFTA) which aims in particular to increase intra-African trade, the continent is holding its breath. Commercial players are impatient to discover the new rules of the game in this free trade market estimated at 1.2 billion consumers. Small cocoa producers in Abidjan (Ivory Coast) and Accra (Ghana) as well as large traders in Mombasa (Kenya) eagerly await this consolidated market. They hope to take advantage of the reduced tariffs to sell their products in this rich market with a combined GDP of $ 2.5 trillion. But the fundamental question is whether Africa is ready to start this process of integration.

In a context of the severity of Covid-19 (new forms of mutations of the virus), some analysts have expressed reservations on the date of the operationality. According to them, the date should be pushed back to better prepare the ground. On the other hand, others firmly believe that the pandemic must be a catalyst to boost this regional integration.

For Senegalese economist Maissa Babou, the date chosen must be postponed because several member countries do not meet the convergence criteria. The Covid-19, he underlines, has finished bringing down all African economies.

According to a recent study, countries have yet to find consensus on the criteria to be used on the continental macroeconomic convergence framework as well as on the steps and the follow-up mechanism.

ZLECA, believe it or doubt it?

Experts, analysts… institutions (World Bank, IMF…) argue that the AfCFTA will be a boon for African countries. According to studies carried out, this market will have a considerable impact on several sectors including industry, tourism and digital. It will generate an estimated income gain of $ 70 billion by 2040, compared to an Africa without the AfCFTA. Intra-African trade will increase from 15% to 25% by 2040, according to the United Nations Economic Commission for Africa (UNECA).

Despite this strong dose of optimism from donors and experts, some economists are playing the card of caution. The latter warn and point the finger at the rush on technical aspects, in particular the nature of the rules of origin and tariff advantages. They are convinced that the AfCFTA will come up against political, legal, infrastructural, financial and security issues.

Entered into force in July 2019 in Niamey (Niger) at the end of the historic summit of the African Union (AU), the AfCFTA will increase the current rate of intra-African trade from 15% to 52.3%, according to a report of the United Nations Economic Commission for Africa (ECA).

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