Obstacles as African free trade bloc opens for business

After months of delays triggered by the global coronavirus pandemic, African countries officially started trading under a new continent-wide free trade zone on Friday. 

However, with complete adoption of the agreement likely to take years, analysts see the launch of New Year's Day as merely symbolic. 

The goal of the African Continental Free Trade Area (AfCFTA) is to put together 1.3 billion people in an economic bloc of US$3.4 trillion, the largest free trade area since the World Trade Organization was created. 

Backers hope it would improve trade between African neighbors while encouraging the continent to grow its own supply chains.. The World Bank estimates it could lift tens of millions out of poverty by 2035.

"There is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant," Ghana's President Nana Akufo-Addo said during an online launch ceremony.

But obstacles – ranging from ubiquitous red tape and poor infrastructure to the entrenched protectionism of some of its members – must be overcome if the bloc is to reach its full potential.

Trade under the AfCFTA was meant to be launched on July 1 but was pushed back after COVID-19 made in-person negotiations impossible.

However, the pandemic also gave the process added impetus, said Wamkele Mene, Secretary-General of the AfCFTA Secretariat.

"COVID-19 has demonstrated that Africa is overly reliant on the export of primary commodities, overly reliant on global supply chains," he said. "When the global supply chains are disrupted, we know that Africa suffers."

Every African country except Eritrea has signed on to the AfCFTA framework agreement, and 34 have ratified it. But observers such as W. Gyude Moore – a former Liberian minister who is now a senior fellow at the Center for Global Development – say the real work begins now.

"I would be surprised if they can have everything set up within 24 months," he told Reuters. "For long-term success, I think we'll need to look at how long it took Europe. This is a multi-decade process."

Historic challenges including Africa's poor road and rail links, political unrest, excessive border bureaucracy and petty corruption will not disappear overnight.

And an annex to the deal outlining the rules of origin – an essential step for determining which products can be subject to tariffs and duties – has not been completed yet.

Meanwhile, 41 of the zone's 54 member states have submitted tariff reduction schedules.

Members must phase out 90 percent of tariff lines – over five years for more advanced economies or 10 years for less developed nations. Another seven percent considered sensitive will get more time, while three percent will be allowed to be placed on an exclusion list.

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Finalising those schedules and communicating them to businesses must be done quickly, said Ziad Hamoui of Borderless Alliance, a group that campaigns for easier cross-border trade.

Yet attempts to enforce the agreement are still expected to meet opposition from the internal pressure groups of countries. Initially, worries of losing out to more successful neighbors made some countries sceptical of the pan-African initiative, including West African giant Nigeria. 

Nevertheless, the zone's proponents are adamant that initial measures towards its adoption would already allow Member States to improve intra-African trade rapidly. 

"Economic integration is not an event. It's a process," said Silver Ojakol, chief of staff at the Secretariat of the AfCFTA. "We must start somewhere."