By Francis Assam

The international system is composed of various continents and countries, none of which are entirely self-sufficient. This interdependence underscores the importance of international trade, as nations leverage their unique resources to foster economic growth. Africa, in particular, is abundantly blessed with both natural and human resources, ranging from crude oil, gold, coltan, lithium, and a teeming youth population, making it a focal point of global economic interests. However, much of Africa’s wealth has historically been extracted under exploitative conditions, especially during colonial rule, when European powers-controlled trade and resource distribution to their advantage. 

To shift the paradigm and reclaim control over its economic destiny, Africa launched the African Continental Free Trade Area (AfCFTA). This historic agreement aims to create a unified market, dismantling trade barriers and fostering economic integration among African nations. By enhancing intra-African trade, AfCFTA has the potential to drive industrialization, attract investment, and create millions of jobs. It represents a crucial step in Africa’s journey toward self-reliance and sustainable economic prosperity.

Understanding AfCFTA

The African Continental Free Trade Area (AfCFTA) is a landmark initiative aimed at fostering economic integration across Africa by creating a unified market for goods and services. Its primary objectives include establishing a single market to deepen economic integration, promoting industrial development through diversification and regional value chain enhancement, and facilitating the movement of capital and people to encourage investment. Additionally, the AfCFTA aspires to lay the groundwork for a future Continental Customs Union and to achieve sustainable and inclusive socio-economic development, with a focus on gender equality and structural transformation among member states.

The journey toward the AfCFTA began in January 2012, when the African Union (AU) decided to initiate the project. Formal negotiations commenced in June 2015 in Johannesburg, leading to the agreement’s adoption and opening for signature on March 21, 2018, in Kigali, Rwanda. The agreement officially entered into force on May 30, 2019, after the requisite number of member states deposited their instruments of ratification. This milestone was celebrated during the 12th Extraordinary Session of the AU Assembly in Niamey, Niger, on July 7, 2019.

Trading under the AfCFTA framework commenced on January 1, 2021. As of September 2022, 54 African countries had signed the agreement, with 43 having deposited their instruments of ratification. The implementation process is designed to be gradual, accommodating the diverse economic landscapes of member states.

The AfCFTA as reiterated further by the African Development Bank AfDB at the just conclude AU 37^th Assembly is a testament to Africa’s commitment to economic unity and holds the promise of transforming the continent’s economic landscape by enhancing intra-African trade and fostering sustainable development.

How AfCFTA Promotes Economic Prosperity

AfCFTA is set to boost intra-African trade by eliminating tariffs on up to 90% of goods and reducing non-tariff barriers. Currently, intra-African trade remains low, accounting for only about 16% of total trade, compared to 67% in Europe. By facilitating easier trade across borders, countries like Kenya and Rwanda have already begun to see increased exports within the region.

The agreement also encourages industrialization by fostering regional value chains and supporting local industries. Nigeria’s manufacturing sector, for instance, stands to benefit from increased demand for locally produced goods, reducing reliance on imports. This shift promotes economic diversification and enhances Africa’s self-sufficiency.

Additionally, AfCFTA aims to attract investments by creating a larger, more predictable market for businesses. South Africa’s automotive industry, which exports vehicles across Africa, is positioned to expand further with reduced trade restrictions, making the continent more appealing to investors.

By fostering trade and industrial growth, AfCFTA is expected to create employment opportunities, particularly in manufacturing and services. Sectors like agribusiness in Ethiopia and Ghana could see millions of new jobs, helping reduce unemployment and poverty rates.

The AfCFTA strengthens regional integration, aligning economic policies and encouraging cooperation among African nations. The East African Community (EAC) already benefits from shared trade policies, and AfCFTA aims to replicate this success on a continental scale, paving the way for sustainable economic prosperity.

Challenges and Roadblocks

One of the biggest challenges to AfCFTA’s success is infrastructure deficits and logistical constraints. Many African countries lack efficient transport networks, making trade costly and time-consuming. For example, it is cheaper to ship goods from China to Nigeria than from Nigeria to Ghana due to poor road and rail connections. Upgrading infrastructure is crucial for seamless trade.

Africa’s economic integration is hindered by political and regional disunity, making it difficult to achieve AfCFTA’s goals. Countries like Niger, Burkina Faso, and Mali have exited ECOWAS, while tensions between DR Congo and Rwanda, Egypt and Ethiopia etc, continues to strain regional cooperation. These divisions weaken trust, disrupt trade agreements, and create economic isolation. Without stronger diplomatic ties and unified policies, AfCFTA’s potential to drive economic prosperity will remain limited.

Political and economic disparities among member states also pose a challenge. Some economies, like Egypt and South Africa, are more industrialized, while others rely heavily on raw material exports. Ensuring fair competition and economic balance is essential to prevent dominance by stronger economies.

Visa restrictions remain a major barrier to free movement in Africa, hindering economic integration under AfCFTA. Many African countries still enforce strict visa policies, limiting cross-border trade and labour mobility. The African Development Bank (AfDB) highlighted this issue at the recent AU 37^th summit, where leaders discussed how visa-free travel could reduce illegal migration and enhance formal trade channels. Easing these restrictions would facilitate business expansion, attract investment, and boost intra-African trade, ultimately strengthening the continent’s economy.

Lastly, there are concerns about competition affecting local businesses. Smaller industries in countries like Malawi and Chad fear they may struggle to compete with stronger regional players. Implementing policies that protect small enterprises while encouraging fair competition will be key to AfCFTA’s long-term success.

The Way Forward

Strengthening trade policies and enforcement mechanisms is key to AfCFTA’s success. Governments must align tariffs, taxation systems, and customs procedures to ensure smooth cross-border trade. ECOWAS has made progress in this area, but broader continental cooperation is needed. Strict enforcement will prevent unfair trade practices and enhance economic stability.

Investing in infrastructure and digital trade will reduce logistical costs and improve market access. Many African countries struggle with poor road networks, making trade expensive and inefficient. Kenya’s Standard Gauge Railway has improved cargo movement, but similar projects are needed across Africa. Digital trade platforms can further streamline transactions, making it easier for businesses to operate.

Enhancing capacity building for small and medium enterprises (SMEs) is crucial, as SMEs drive Africa’s economy. Many struggles with access to financing and markets. Initiatives like Ghana’s One District, One Factory can help integrate SMEs into AfCFTA’s framework, fostering industrial growth.

Promoting cooperation among African nations and regional blocs will strengthen economic ties. The East African Community (EAC) has shown how regional collaboration boosts trade. Expanding such partnerships under AfCFTA can enhance unity, drive investment, and position Africa as a strong global economic player.