The African Continental Free Trade Area (AfCFTA) and other African Union (AU) initiatives for economic integration
The AfCFTA is part of the broader economic integration and development agenda which has been Africa’s aspiration since independence and led to the formation of the Organisation of African Unity in 1963, and its subsequent transformation into the AU. The creation of the AfCFTA is an important milestone.
The AfCFTA aims to create a single continental market for goods, services and free movement of persons and capital. Its aims include boosting intra-African trade, contributing to sustainable economic development and structural transformation, and facilitating industrialisation through diversification and the development of regional value chains and agricultural production.
The AfCFTA is not a stand-alone initiative. It is aligned to the goals of other AU programs crucial for the development and interconnection of the continent. These programs include the Agenda 2063, Program for the Infrastructural Development of Africa (PIDA), the Action Plan for the Accelerated Industrial Development Africa (AIDA), Action Plan for Boosting Intra-African Trade (BIAT), and the Comprehensive Africa Agriculture Development Programme (CAADP), among others. Essentially, the AfCFTA does not replicate, replace or reinvent the existing continental programs but should complement them.
Agenda 2063 was adopted by the AU in 2015 as a strategic framework for Africa’s socio-economic transformation over 50 years. It emphasises the continent’s ambition to attain inclusive growth, sustainable development and structural transformation. The AfCFTA is a flagship project of the Agenda 2063 towards achieving inclusive growth, sustainable development and structural transformation of the continent. Agenda 2063 recognises the role played by trade in achieving sustainable development, alleviating poverty. It identifies the fast-tracking of the AfCFTA as fundamental to Africa’s economic and social transformation. The AfCFTA’s wide-scope (covering trade in goods, trade in services, investment, intellectual property rights and competition policy) has the potential to facilitate structural transformation of African economies.
In addition, the AfCFTA can support Africa’s economic growth and development, and structural transformation. Its implementation can create economies of scale and regional value chains and generate employment opportunities.
BIAT was adopted by the AU in 2012 and focuses on addressing supply side constraints, while the AfCFTA focuses more on addressing market access constraints (reduction of tariffs and non-tariff barriers for goods and lowering regulatory barriers to cross-border trade in services). BIAT identifies seven priority action clusters. These include: trade policy; trade facilitation; productive capacity; trade related infrastructure; trade finance; trade information; and factor market integration. Effective implementation of the BIAT can reduce market access constraints and increase the benefits of trade liberalisation, and assist African firms to take advantage of the AfCFTA. Intra-African trade can be boosted through tariff liberalisation and trade facilitation measures.
Industrialisation is essential to the realisation of the AfCFTA objectives. At the continental level, industrialisation is pursued through the AIDA, which seeks to contribute to developing and diversifying Africa’s industrial capacity, supporting value addition and beneficiation on the continent, and enhancing competitiveness. AIDA and AfCFTA are mutually supportive endeavours. AIDA has the potential to boost the capacity of firms to produce goods and services; enhancing the continent’s capacity to trade.
The AfCFTA objective to boost intra-African trade cannot be achieved without adequate trade-related infrastructure. The development of infrastructure at the continental level is supported through PIDA. PIDA focuses on the promotion of transboundary and transnational infrastructure. PIDA will aid the attainment of AfCFTA goals through facilitating the movement of goods, services, people and capital across the continent, as well as support the development of regional value chains.
The AfCFTA is expected to boost intra-African agricultural trade, and promote agricultural development and food security. Crucial to the attainment of these objectives is CAADP – Africa’s strategic framework for agriculture and agriculture-led development. CAADP makes provisions for enhancing food security, rural development, productivity and enhanced participation in agricultural value chains. These provisions will not only support the AfCFTA agriculture development and food security goal, but will also create opportunities for agricultural economies to benefit from the AfCFTA. This can help to develop and strengthen regional supply and value chains in agricultural commodities.
The AfCFTA has the potential to increase intra-African trade, support structural transformation, improve agricultural productivity and food security, enhance economic growth and export diversification. This is complemented by other continental flagship programs aimed at advancing the development and connectivity of Africa such as the Agenda 2063, AIDA, PIDA, CAADP. That said, it is imperative for the AU to prioritise, expedite and ensure coherent implementation of these initiatives.
For more on these and other AU initiatives, visit tralac’s African Union resources page.
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