A fortnight ago African leaders converged in Kigali, Rwanda’s capital, to sign the African Continental Free Trade Agreement (AfCFTA). If the agreement is ratified by all 22 governments, import tariffs will be scrapped on 90% of goods being traded within the continent. Could this mark a fresh start to Africa’s dream of economic rejuvenation or is this just another false start?
The prospects of a fresh start are tantalisingly brighter than this being another false start. Yet so much could still go wrong. The world’s powerful countries have turned inward, succumbing to narrow, short-term populist thinking. Europe is battling with terrorism and immigration and a new trade deal with Britain to manage Brexit. The US, under its erratic leader, is on a destructive path.
Under Vladimir Putin, Russia’s global stature has diminished. Only one forum, the Brics grouping of leading developing nations, seems to show any regard for it. Having solidified his status as China’s de facto emperor, Xi Jinping will begin feeling a pushback to his power abroad, including on this continent, where Chinese money (soft loans for infrastructure projects, and Africa’s minerals) and products are now increasingly being questioned.
The World Trade Organisation, the global trade watchdog, is at its weakest in history after the failure of its ministerial conference last December. So, by all accounts this is Africa’s time. Intra-African trade is woefully low — as low as 18%, according to some estimates — which makes the scope for growth, especially for manufactured goods, limitless. Trade with the rest of the world still mirrors colonial trends: Africa supplies colonial powers with minerals, and only lately has China stepped in as the largest consumer of those.
Slowly but steadily, most African countries have reclaimed their economic sovereignty from donor powers. The World Bank and IMF are playing a less ruinous role than they did in the 1980s and 1990s through regimes of structural adjustment programmes.
Once 22 governments ratify the AfCFTA it should be all systems go — in theory at least. In practice, the deal may yet be stillborn.
Tariffs aren’t too much of a problem. The main problem is nontariff barriers to trade, such as rules and standards and lack of effective customs systems to govern a new tariff-free regime and, importantly, what signatories choose to keep out of the basket of items covered by the AfCFTA.
The list of exclusions could scupper the deal. This list is not scientifically compiled and could be hijacked by protectionists. Also, lowering tariffs without supporting uniform standards could make a mockery of the AfCFTA. The EU is a case in point, where standards (including dubious health and packaging regulations) are used to keep products out of the single market. Agreeing on common standards could take years.
Most of Africa’s customs authorities are too weak to support the aspirations of the politicians, especially when it comes to telling what has genuinely been produced in Africa by Africans. Also, it makes no sense to allow goods and services to move freely within the continent when their producers still face travel hurdles across borders.
This isn’t the first time African politicians have tried to increase trade among their countries. This ambition has often been frustrated by internal factors rather than external threats. The continent has a poor record of implementing any of its resolutions, especially insofar as multilateralism is concerned. Self-imposed deadlines come and go, and new ones are set only to be missed again.
Apart from a poor implementation record, the continent’s leadership has a bad reputation of double standards and, on occasion, changing its mind midstream. For example, a few African countries, including SA, are considering withdrawing from the Rome Statute, which established the International Criminal Court. Instead of fixing the defects of the court, including legitimate concerns about double standards, they choose to walk away. The same could happen with something as important as the AfCFTA.
In addition, implementing the AfCFTA will require the support of trade unions —which have more protectionist instincts than governments — and clear industrial policies to beneficiate Africa’s raw materials to replace imports from the developed world and China.
Ambitious ideas like the AfCFTA require credible, inspiring champions to shepherd them through. Often such champions are to be found in bigger economies, such as France and Germany in the case of the EU, which stand to benefit much more than smaller economies. The AfCFTA, on the other hand, is being promoted by Paul Kagame, Rwanda’s president, and Niger’s Issoufou Mahamadou – two unlikely souls. The continent’s three largest economies – Egypt, SA and Nigeria – are followers.
This isn’t necessarily bad, but the worry is they’ve not been enthusiastic supporters of free trade in a long time. This may yet change under new leadership in SA, giving AfCFTA a fresh start at economic growth, employment and better living standards for Africans.
• Dludlu, a former Sowetan editor, is founder of Orwell Advisory Services.
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