In this environment, free trade provides a much-needed stimulus, and the African Union (AU) has continued to make impressive strides in difficult times: in March 2020 the AU established the African Continental Free Trade Agreement (AfCFTA) Secretariat in Accra, with Wamkele Mene sworn in as Secretary General.
On 1 January 2021, trading amongst State Parties began under the AfCFTA — one of the world’s largest free trade areas by population, with 1.2 billion people covered across 54 countries, representing a combined GDP of $3.4 trillion. The agreement was originally signed in 2018 and entered into force in May 2019, and over the past year, Secretary Mene and his partners in the AU have secured the signatures of all 55 AU member nations except for Eritrea, and 36 countries have ratified it.3
This milestone comes at a time of another historical event – the confirmation of Dr. Ngozi Okonjo-Iweala to lead the World Trade Organization (WTO). Okonjo-Iweala, who is a supporter of the AfCFTA, is the first woman and the first African to lead the WTO.
The start of trading under the AfCFTA is no small feat and is a counterweight to stagnating global trade volumes and the growth of restrictive trade policy measures in the years since the 2008 financial crisis. Further, the political support the AU has achieved to date is a considerable achievement.
But there is still much more to do. Many African nations face a challenge to fully implement the AfCFTA’s terms. These challenges range from fully adopting new customs procedures to agreeing on tariff reductions. This year’s milestone, while important, is somewhat of a symbolic one, as major components of the agreement still must be negotiated, between many countries and regional economic groupings. As of December, 41 countries had submitted their schedules of tariff concessions. Outstanding work on rules of origin, trade in goods and trade in services are now expected to be concluded before the end of June 2021. Lowering or eliminating internal tariffs, improving trade logistics and addressing poor infrastructure are critical to increasing the implementation and success of the AfCFTA.