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The African Continental Free Trade Area (AfCFTA) and the Sustainable Development Goals (SDGs)

By Willemien Viljoen
23 Feb 2018
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The African Continental Free Trade Area (AfCFTA) and the Sustainable Development Goals (SDGs)

In September 2015, the 17 SDGs of the 2030 Agenda for Sustainable Development were adopted by world leaders. The overarching rationale for the SDGs is to eradicate poverty, protect the planet and end inequality. Included in the 17 SDGs are the eradication of poverty through inclusive economic growth that provides sustainable jobs and promote equality; infrastructure investment, sustainable industrial development and technological progress; and food security and sustainable agriculture.

To achieve the SDGs, 169 specific targets have been set to be reached by 2030. These include investment in rural infrastructure and agricultural extension services; the prevention of restrictions and distortions in agricultural markets and timely access to market information; access to information and communication technology; integrating small-scale industries into value chains and markets; access to affordable essential medicines and vaccines; and access to education, water and sanitation, financial and reliable energy services.

The objectives of the AfCFTA include the creation of a single continental market for goods and services with the free movement of business persons and investment, the expansion of intra-Africa trade and the improvement of the competitiveness of industries and enterprises. To achieve these objectives the AfCFTA is not just focused on liberalisation of trade in goods, but also services liberalisation, trade facilitation, addressing non-tariff barriers to improve access to markets, competition policy, intellectual property rights and possibly e-commerce. If these objectives can be achieved the AfCFTA can make a valuable contribution to African countries’ progress on the SDGs.

The AfCFTA can contribute to the SDGs through:

Improved intra-Africa goods trade

An important aim of the AfCFTA is to facilitate intra-African goods trade by making cross-border trade easier, simpler and less costly. Trade facilitation measures to address non-tariff barriers, like delays at borders, inefficient customs documentation, lack of timely information on health certification and standards and inconsistencies in transit traffic requirements can allow for the easier flow of goods through the region. These trade facilitation measures can only be successful if coupled with investment in infrastructure; both hard infrastructure like upgrading of border posts, roads, rail and Information and Communication Technology (ICT) infrastructure and soft infrastructure such as policy and regulation to support the competitive access to the infrastructure services.

Enlarging the African market by making it easier and more cost effective to trade inter-continentally can attract Foreign Direct Investment (FDI) for national and regional infrastructure projects. Infrastructure investment enhancing regional connectivity, in turn, stimulates market demand for African products which are more easily accessible. With improved access to inputs into the manufacturing process, markets and public infrastructure, producers including small and medium sized enterprises can improve competitiveness and production capacity. If intra-Africa and cross-border trade becomes easier and less costly the AfCFTA creates the opportunity to establish regional value chains and promote industrial development, but also affords benefits for small-scale producers and informal cross-border traders. Increased intra-Africa trade can have numerous knock-on effects which can be linked with the targets for the SDGs, including poverty alleviation, food security and addressing inequality through industrial development and the flow of benefits to small-scale producers and informal cross-border traders due to improved access to inputs, infrastructure, information and markets.

Services liberalisation and the movement of business persons

There is significant focus on access to services in the targets of the SDGs and the AfCFTA can play a significant role to facilitate the flow of services on the continent. Liberalising services trade and synchronising services trade regulations can have an immense impact on the majority of the SDGs. Services trade and the movement of business persons also have a direct link to industrial and infrastructure development. The movement of business persons facilitates the transfer of knowledge and know-how and trade-related services including agriculture extension services and energy, ICT, financial, education, health and professional services are vital for sustainable economic growth but often lacking in African economies. Through improved access to services the AfCFTA can make a cross-cutting contribution to the SDGs. Services trade can have a direct impact on sustainable economic growth, improving the health and education of the working population and youth; access to finance for agriculture, small-scale producers and entrepreneurs; and efficient infrastructure-related services to improve the functioning of the economy.

Competition policy, intellectual property and e-commerce

The second phase of the AfCFTA negotiations addresses key policy issues that can lead to a fair playing field in African economies. Intellectual property governance is important for example for the development of pharmaceutical production capacity and access to medicines on the continent; an important element for the provision of health services. E-commerce and increased connectivity can be of significant benefit to small-scale producers and entrepreneurs to reach markets otherwise unattainable.

The AfCFTA will serve to integrate the markets and economies of 55 countries, all at different stages of development. Progressive liberalisation can give least developed countries the necessary time to build productive capacity and diversity from trade in commodities to ensure long-term sustainable economic growth, employment creation and poverty alleviation.


Sources:

African Union (https://au.int/en/ti/cfta/about)

United Nations (http://www.un.org/sustainabledevelopment/sustainable-development-goals/)

About the Author(s)

Willemien Viljoen

Willemien Viljoen

Willemien Viljoen holds a Master’s degree in Economics and a Bachelor of Laws degree (LLB) from the University of Stellenbosch. Her research interests are in regional integration and international trade policy, and specifically in issues pertaining to non-tariff barriers to trade, trade data analysis and modeling and trade and climate change.

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