INTER TRADE.

Critically examine the legal and institutional framework, functional mandate and

organizational challenges of the African Continental Free Trade Area (AfCFTA). What are

the prospects and problems of the organization?

INTRODUCTION.

The tendency of nations to resort to economic regionalization is a phenomenon which has

intensified considerably from the years 1980. According to authors, this regionalization,

responds either to a desire of countries to protect themselves against the misdeeds of

globalized free trade or it is a new form of globalized free trade because regionalization and

globalization are overlapping and entwined processes. The regional trade agreements which

materialize this economic regionalization have exploded since that period. The reasons for

this explosion is due to the fact that theoretically this regionalization is supposed to allow

better integration, and can improve the welfare of households by removing tariff and non-

tariff barriers in a region. This phenomenon of regionalization expanding all over around the

world (Caricom, CIS, EU, Mercosur, NAFTA, ASEAN, TTIP, TPP ...) is also found in

Africa with several regional economic groups that often overlap between themselves. Today

there are fourteen major Regional Economic Communities (RECs) in Africa that are more or

less integrated. Of these groups, eight have been recognized as RECs (UMA, COMESA,

CEN–SAD, EAC, ECCAS, ECOWAS, IGAD, and SADC) by the African Union. Despite all

these organizations that are supposed to boost intra-African trade, it is clear that it remains

one of the lowest in the world. The emergence and integration of the continent have not yet

been achieved; Africa remains a marginal player in world trade. In spite of this

acknowledgment of failure, countries in Africa continue to believe that there is a saving

solution in economic regionalization for their economic integration and emergence. That is

why, recently African Union created the African Continental Free Trade Area (AfCFTA).

The AfCFTA is examined in this study and critical analysis, which also examines its history,

foundation, founding nations, and prospective effects on the economy, society, and

development.

THE AFRICA CONTINENTAL FREE TRADE AREA

BACKGROUND.

The vision for African continental economic integration is over 50 years old, originating from

the appreciation that political independence achieved through decolonization would not lead

to a better life for the people of Africa, unless consummated with economic independence

from former colonial rulers. The continent’s resource endowment is to be used for the benefit

for African nations, with progress being aimed at eventual self-sufficiency as tangible result

of complete independence.

In 1963, 32 Heads of independent African States signed the Organisation of African Unity

(OAU) Charter, serving as a concrete refinement of the Pan- African movement. Article II of

the agreement illustrates the purposes of the organisation, which include “to coordinate and

intensify their cooperation and efforts to achieve a better life for the peoples of Africa” and;

to defend sovereignty and independence. It also implores Members States to coordinate and

harmonize their general policies in the field of “economic cooperation, including transport

and communications. Although only vaguely mentioned, the importance of economic

integration through coordination between member states is evident. As the wave of

decolonisation continued, members of the OAU signed the Lagos Plan of Action in 1980, as

an effort to create a legally binding treaty for continental economic integration in a bid to

increase Africa’s self -sufficiency. The plan affirmed Member States’ commitment to the
creation of the African Economic Community (AEC) by 2028, “so as to ensure the

economic… integration of our continent”. This would be achieved in no small part through

strengthening of the existing regional economic communities in Central, Eastern, Western,

Southern and North Africa, by promoting co-ordination and harmonisation among the

communities. This was the first explicit mention of the importance of regional economic

integration as a driving force towards continental integration.

While the aforementioned agreements lay the foundations for continental integration, they are

largely political, articulating the economic sentiments of the Pan-African movement,

encouraging member states to formally acknowledge these, without creating legally binding

commitments or structures aimed at monitoring progress and compliance. In light of the goals

set out in the Lagos Plan, members of the OAU negotiated and signed the Treaty Establishing

the AEC (Abuja Treaty) in 1991; a legally binding agreement constituting the AEC and

supporting administrative and dispute settlement bodies. While echoing the objectives set out

in the preceding treaties, the importance of “the peaceful settlement of disputes among

member states” and the co-ordination and strengthening relations between existing and future

Regional Economic Communities (RECs) are highlighted as pre-requites for effective

economic development and the gradual endeavour towards full continental integration.

Pursuant to the establishment of the AEC, in 2006, members of the now African Union (AU)

agreed to continue to strive towards economic integration through international trade in the

Action Plan on Boosting Intra-African Trade (BIAT). The agreement identifies seven areas of

cooperation, namely trade policy, trade facilitation, productive capacity, trade related

infrastructure, trade finance, trade information and factor market integration.

The agreement also attempts to rationalise the African economic integration landscape by

officially recognising eight existing RECs that would serve as the building blocks towards

continental integration, regardless of their levels of regional economic and political

integration- policy harmonisation and co-ordination between the RECs being of paramount

importance.

In 2018 members of the AU signed the Agreement Establishing the African Continental Free

Trade Area (AfCFTA). Desiring the implementation of the BIAT Plan and acknowledging

the goals set out in the Abuja Treaty, the AfCFTA aims use the recognised RECs as the

building blocks towards the creation of a single continental free trade area. With 54 States as

signatories, this is the largest trade agreement (by the number of participating countries) in

the world since the formation of the World Trade Organisation (WTO). The general

objectives of the agreement are to create a continental market for trade in goods and services,

with free movement of persons and investments, thus paving the way for accelerating the

establishment of a continental customs union.

In the midst of the aforementioned mega-regional agreements and legally binding treaties,

African states were also enacting smaller plurilateral RECs, and negotiating mergers between

RECs. However, despite what appears to be decades of commitment and effort towards

economic integration and promotion of intra-African trade to ensure the self-sufficiency of

the continent, these efforts have yielded poor results. In 2017, only 16% of Africa’s world

exports were intra-African exports, while intra-African imports accounted for 13%. More

than 80% of Africa’s exports are destined to former colonial powers in the European Union

(EU) as well as the United States. Notwithstanding Africa’s resource endowment, 90% of

goods and services imported into the continent are from outside the continent. Evidently,

successive attempts at economic integration have been largely ineffective, fraught with

social, economic and legal challenges.

In 2002, the OAU was succeeded by the African Union (AU), which had as one of its goals to

accelerate the "economic integration of the continent". A second goal was to "coordinate and
harmonize the policies between the existing and future Regional Economic Communities for

the gradual attainment of the objectives of the Union.

At the 2012 African Union summit in Addis Ababa, leaders agreed to create a new

Continental Free Trade Area by 2017. At the 2015 AU summit in Johannesburg, the summit

agreed to commence negotiations. This began a series of ten negotiating sessions which took

place over the next three years.

The first negotiation forum was held in February 2016 and held eight meetings until the

Summit in March 2018 in Kigali. From February 2017 on the technical working groups held

four meetings, where technical issues were discussed and implemented in the draft. On

March 8–9, 2018 the African Union Ministers of Trade approved the draft.

2018 Kigali Summit

In March 2018, at the 10th Extraordinary Session of the African Union on AfCFTA, three

separate agreements were signed: the African Continental Free Trade Agreement, the Kigali

Declaration; and the Protocol on Free Movement of Persons. The Protocol on Free Movement

of Persons seeks to establish a visa-free zone within the AfCFTA countries, and support the

creation of the African Union Passport. At the summit in Kigali on 21 March 2018, 44

countries signed the AfCFTA, 47 signed the Kigali Declaration, and 30 signed the Protocol

on Free Movement of People. While a success, there were two notable holdouts: Nigeria and

South Africa, the two largest economies in Africa.

One complicating factor in the negotiations was that Africa had already been divided into

eight separate free trade areas and/or customs unions, each with different regulations. These

regional bodies will continue to exist; the African Continental Free Trade Agreement initially

seeks to reduce trade barriers between the different pillars of the African Economic
Community, and eventually use these regional organizations as building blocks for the

ultimate goal of an Africa-wide customs union.

Membership.

Among the 55 AU member states, 44 signed the African Continental Free Trade Agreement

(consolidated text), 47 signed the Kigali Declaration and 30 signed the Protocol on Free

Movement of People at the end of the 2018 Kigali Summit. Benin, Botswana, Eritrea,

Guinea-Bissau, Nigeria, and Zambia were among the 11 countries that did not initially sign

the agreement. After the 2018 Kigali summit, more signatures were added to the AfCFTA. At

the 31st African Union Summit in Nouakchott on 1 July 2018, South Africa (the second

largest economy of Africa), Sierra Leone, Namibia, Lesotho and Burundi joined the

agreement. In February 2019, Guinea-Bissau, Zambia and Botswana also joined. Kenya and

Ghana were the first nations to ratify the agreement, depositing their ratification on 10 May

2018.

Of the signatories, 22 needed to deposit the instrument of ratification of the agreement for it

to come into effect, and this occurred on 29 April 2019 when both Sierra Leone and the

Sahrawi Arab Democratic Republic deposited the agreement. As a result, the agreement came

into force 30 days later on 30 May 2019. At this point, only Nigeria (the continent's largest

economy), Eritrea and Benin had not signed.

Former President of Nigeria, Muhammadu Buhari was particularly reluctant to join the

AfCFTA, fearing it would hurt Nigerian entrepreneurship and local industries, and his

decision not to was praised by some local groups including the Manufacturers Association of

Nigeria and the Nigeria Labour Congress. The Nigerian government intended to consult

further with local businesses in order to ensure private sector buy-in to the agreement,
because a key concern was whether the agreement adequately prevented anti-competitive

practices such as dumping. In July 2019, just months after being re-elected to a new term,

Buhari agreed to adhere the Africa free trade at the 12th extraordinary session of the

assembly of the union on AfCFTA.

At the same meeting, Benin also committed to signing the agreement, leaving Eritrea as the

only of the 55 African Union Member States not to sign up to the deal. Formally, Eritrea was

not part of the initial agreement due to an ongoing state of war, but the 2018 peace agreement

between Ethiopia and Eritrea ended the conflict and ended the barrier to Eritrean participation

in the free trade agreement.

As of May 2022, there are 54 signatories, of which 43 (80%) have deposited their instruments

of ratification. Additionally, one country (Somalia) completed its domestic ratification, but

had not yet deposited their ratification with the depository by May 2020. Eritrea is the only

AU member state which had not signed the agreement by 2019.

Goal and Objectives/Functional Mandates of AfCFTA

The signing of the AfCFTA on 21 March 2018 marked a momentous milestone for economic

integration in Africa- as of July 2019, 54 out of 55 AU Member States are signatories to the

agreement. The agreement came into force on 30 May 2019 after 22 State Parties deposited

their ratification instruments, allowing the AfCFTA to enter into its operational phase. The

protocols on trade in goods and services, dispute settlement procedures and their annexes

covering customs cooperation, trade facilitation, sanitary and phytosanitary measures and

rules of origin are currently in force. Negotiations, undertaken by the AU Member Heads of

State, have been divided into two distinct phases; Phase I pertaining to the aforementioned

protocols, and Phase II being negotiations of the protocols on competition policy, intellectual
property, and investment. It must be noted that some Phase I issues including schedules of

tariff concessions, schedules of services commitments and rules of origin remain still to be

negotiated. The AfCFTA promises to eliminate tariffs (up to 97% of tariff lines) and NTBs

and liberalise trade in services – particularly in the financial, transport, tourism, business and

communication sectors, among others. However, to date, it remains unclear which products

will be subject to tariff cuts, which services will be liberalised and what system of rules of

origin that will be applied. The AU has indicated that trading under the AfCFTA will

commence by 1 July 2020.

While acknowledging the pursuit of the Pan-African vision for economic independence, the

launch of the AfCFTA must also be seen in the context of growing uncertainty over the future

of the direction of the global multilateral trading system, and ever-changing trade landscape.

African states are not a party of any of the emerging mega-regional trade agreements, such as

the Trans-Atlantic and Investment Partnership, the Trans-Pacific Partnership and the

Regional Comprehensive Economic Partnership. The United Nations Economic Commission

for Africa (UNECA) research estimates that due to preference erosion and greater

competition faced by African countries in the mega-regional markets, total exports from

Africa could be reduced by USD 2.7 Billion. These negative impacts could be offset with the

effective establishment of the AfCFTA.

As previously noted, the general objectives of the AfCFTA are to create a continental market

for trade in goods and services, with free movement of persons and investments, thus paving

the way for accelerating the establishment of a continental customs union. Article 4 of the

AfCFTA highlights the specific objectives necessary to realise these general objectives.

Particular importance to this analysis are the objectives requiring State parties to “establish a

mechanism for the settlement of disputes concerning their rights and obligations” and to
“establish and maintain an institutional framework for the implementation and administration

of the AfCFTA”

The AfCFTA is a Free Trade Agreement (FTA), established in terms of Article XXIV:8(b) of

the WTO General Agreement on Tariffs and Trade (GATT, 1994), aimed at jumpstarting

intra-African Trade and boosting investment in the continent. Article 3 of the AfCFTA

provides for the general objectives of the agreement; with the primary objective being “to

create a single market for goods, services, facilitated by movement of persons in order to

deepen the economic integration of the African continent and in accordance with the Pan

African Vision of “An integrated, prosperous and peaceful Africa enshrined in Agenda

2063”. The AfCFTA will also serve to “lay the foundation for the establishment of a

Continental Customs Union at a “later stage” in terms of the GATT Article XXIV:8(a).

Article 4 of the AfCFTA stipulates that State parties have committed “cooperate on all trade

related areas, while Article 5 illustrates the governing principles of the agreement. Of

particular importance are that the AfCFTA “will be driven by Member States of the AU” and

that RECs shall be the “building blocs” for the establishment of the FTA. It is clear that the

signatory states envision a very high and intricate level of economic integration, that will be

achieved largely through the progressive removal of tariff and Non-Tariff Barriers (NTB) to

trade, and characterised by reciprocity in participation and equal opportunity for benefits

gained from effective implementation. The UNECA estimates that under the AfCFTA, intra-

African trade could increase by 52.3% by 2022, and once the final 10% of tariffs are

removed, this trade could be doubled again.

Overall, improvement in intra-African trade and enhanced levels of economic integration

stand to advance the lives of regular African people. In line with the United Nations (UN)

Sustainable Development Goals, the AU 2063 Agenda and other development-oriented

programmes, poverty alleviation considered a top priority in African States. Arguably, the
most vulnerable sectors of the population across the continent- the youth and women- stand

to benefit the most from improved trade facilitation, access to markets and free movement of

labour. A present, it suggested that Africa’s most urgent challenge is the fact that its massive

youth population is devoid of economic and social prospects. With 60% of the continent’s

population being under 25 years old, youth unemployment is considered one of the most

pressing challenges that governments need to address. Under the AfCFTA, expanded markets

and unobstructed factor movements of labour, goods, services, capital and persons should

promote economic diversification, structural transformation, and technological development

and facilitate job creation. A single African market will provide a conducive environment for

professional mobility and skills portability.

The AfCFTA, through supporting improved trade facilitation efforts on the continent will

also make strides in formalising informal the cross-border trade practices which make

significant contributions to the economies of most African States. A majority of informal

cross-border trade in Africa is carried out by women, and is considered the most important

source of employment among women in Sub-Saharan Africa, providing 60% of non-

agricultural self-employment. Many of the major challenges faced by these traders are caused

by the deficient implementation of regional trading agreements and protocols.

This causes conflicts between nation and regional trading policies, thus stifling the smooth

movement of goods and persons across border. Traders are subject to heavy duties and

inconsistent licensing and clearance procedures. Likewise, because of the lack of coherent

trade facilitation regulation, women also face other non-economic risks and challenges at

borders- these include theft of their goods, corrupt propositions from customs officials and

sexual abuse from border authorities. The protection of women and other vulnerable is of

groups in Africa is of paramount importance; foremost, because they are persons who deserve

safe and fair opportunities to partake in economic activities to improve their lives and those
of their households. Also because their protection through improved trade facilitation and

regulation stands to increase the significance to the economic growth and development of

African States.

LEGAL AND INSTITUTIONAL FRAMEWORK OF THE AfCFTA

The African Continental Free Trade Agreement's (AfCFTA) institutional frameworks are

essential to the agreement's success and efficient implementation. These frameworks offer the

procedures, institutions, and mechanisms required to support the AfCFTA's operation and

respond to the many demands and difficulties faced by member nations. The following

elements make up the AfCFTA's institutional framework:

The Assembly

According to Part III, Article 10 of the Agreement establishing the AfCFTA, The Assembly,

as the highest decision-making organ of the AU, shall provide oversight and strategic

guidance on the AfCFTA, including the Action Plan for Boosting Intra-African Trade

(BIAT). The Assembly shall have the exclusive authority to adopt interpretations of the

Agreement on the recommendation of the Council of Ministers. The decision to adopt an

interpretation shall be taken by consensus.

In WTO law, the Ministerial Conference has exclusive authority to adopt decisions on

interpretations. This makes the Ministerial Conference have the final say on interpreting

WTO law. This means that power does not lie with the WTO’s judicial arm, the Dispute

Settlement Body. Of significance for the viability of the AfCFTA is the fact that while even

the impasse-prone WTO decision-making system makes provisions for voting with respect to

the adoption of interpretations by the Ministerial Conference by majority vote when the issue

cannot be decided by consensus, in the AfCFTA Agreement the Assembly makes decisions
on interpretations solely by consensus. This will invariably make the AfCFTA decision-

making procedure on interpretations more rigid than what pertains in the WTO. In fact, per

the provisions in Article 14 of the AfCFTA Agreement, decisions of the Assembly, the

Council of Ministers and the Committee of Senior Trade Officials are to be taken by

consensus. The simple majority voting procedure is only to be used for decisions on

questions of procedure.

Consequently, every member of the legislative decision-making bodies of the AfCFTA

effectively wields a veto power. One may hope that the stagnation that has plagued the WTO

will not occur in the AfCFTA. However, the very design of the legislative decision-making

provisions raises legitimate apprehensions of gridlock. Thus, no matter how laudable the

substantive provisions in the AfCFTA Agreement are, if the decision-making provisions

required for operationalizing them are too unwieldy, the full benefits of the Continental Free

Trade Area will become a mirage. It is not clear why the framers of the AfCFTA Agreement

will adopt such a rigid decision-making system when they have had the benefit of knowing

its fundamental flaws in the WTO.

The Council of Ministers

The Council of Ministers responsible for trade will decide on the location of the headquarter,

structure, role and responsibilities. The Council of Ministers is composed of the Ministers

responsible for trade and officials designated by the Member states. The Council reports to

the Assembly through the Executive Council. The Council of Ministers meets twice a year in

ordinary sessions and may meet as and when necessary, in extraordinary sessions. The

Council of Ministers Responsible for Trade provides strategic trade policy oversight and

ensures effective implementation and enforcement of the AfCFTA Agreement.

It is distinct from the AU's Committee of African Union Ministers of Trade (AMOT). The

Council is responsible for ensuring the Agreement's effective execution and enforcement and

for taking all necessary steps to advance the AfCFTA's goals. The Executive Council of the

AU is the channel via which the Council of Ministers reports to the AU Assembly.

The Council of Ministers shall report to the Assembly through the Executive Council.

(Article 11)

The Council of Ministers shall within its mandate:

(a) take decisions in accordance with this Agreement;

(b) ensure effective implementation and enforcement of the Agreement;

(c) take measures necessary for the promotion of the objectives of this Agreement and other

instruments relevant to the AfCFTA

(d) work in collaboration with the relevant organs and institutions of the African Union;

(e) promote the harmonisation of appropriate policies, strategies and measures for the

effective implementation of this Agreement;

(f) establish and delegate responsibilities to ad hoc or standing committees, working groups

or expert groups;

(g) prepare its rules of procedure and those of its subsidiary bodies created for the

implementation of the AfCFTA and submit them to the Executive Council for approval;

(h) supervise the work of all committees and working groups it may establish pursuant to this

Agreement;
(i) consider reports and activities of the Secretariat and take appropriate actions;

(j) make regulations, issue directives and make recommendations in accordance with the

provisions of this Agreement;

(k) consider and propose for adoption by the Assembly, the staff and financial regulations of

the Secretariat;

(l) consider the organisational structure of the Secretariat and submit for adoption by the

Assembly through the Executive Council;

(m) approve the work programs of the AfCFTA and its institutions;

(n) consider the budgets of the AfCFTA and its institutions and submit them to the Assembly

through the Executive Council;

(o) make recommendations to the Assembly for the adoption of authoritative interpretation of

this Agreement; and

(p) perform any other function consistent with this Agreement or as may be requested by the

Assembly.

The Secretariat

The AfCFTA Secretariat is a specialized institution established to oversee the day-to-day

implementation and management of the AfCFTA. It is located in Accra, Ghana, and serves as

the operational arm of the agreement. The Secretariat is responsible for facilitating trade

negotiations, coordinating trade-related activities, resolving disputes, promoting capacity

building, and providing information to stakeholders.

The AfCFTA Secretariat – charged with various responsibilities related to the

implementation of the AfCFTA – is hosted by Ghana. H.E. Mr. Wamkele Mene was

officially appointed the first Secretary General of the Secretariat on 19 March 2020. The

AfCFTA Secretariat was officially handed over in Accra, Ghana on 17 August 2020.

The AfCFTA Secretariat will be responsible for coordinating the implementation of the

agreement and shall be an autonomous body within the AU system. Though it will have

independent legal personality, it shall work closely with the AU Commission and receive its

budget from the AU. The Secretariat is responsible for convening meetings, monitoring and

evaluating the implementation process of the AfCFTA and other duties assigned to it by the

AU Assembly of Heads of State, the Council of Ministers, and the Committee of Senior

Trade Officials. The Secretariat houses experts, notably in legal affairs, economic

policymaking, research, and communications, to assist the Member States, among other

things, in ensuring easy progress of negotiations and that the rules set out in the Agreement

are correctly applied and enforced.

The whole existence of the AfCFTA is to create a single continental market for the free

movement of goods, services and investments. The AfCFTA Agreement covers goods and

services, intellectual property rights, investments, digital trade and Women and Youth in

Tade among other areas. The Secretariat, therefore, works with State Parties to negotiate

trade rules and frameworks for eliminating trade barriers while putting in place a Dispute

Settlement Mechanism, thereby levelling the ground for increased intra-Africa trade.

Another function of the Secretariat is to ensure that trade policies of the various State Parties

are in conformity with the provisions in the AfCFTA Agreement. Where there are identifiable

gaps, the Secretariat then facilitates the process of bridging the gaps. It also undertakes
periodic reviews of State Parties reports and monitors the overall implementation of the

Agreement while providing appropriate interventions.

The AfCFTA Secretariat empowers State Parties and Non-State Parties to implement the

Agreement effectively. In that regard, the Secretariat assesses the ability of each State Party

and the Member States and offers appropriate capacity-building interventions to enable equal

participation in the adoption and implementation of the Agreement.

The Secretariat undertakes frequent sensitisation programmes to dialogue with key

stakeholders such as Civil Society Organizations, the Private Sector, Government Officials

and Agencies, Partners, and other interest groups; in a bid to create awareness about the

AfCFTA Agreement and the potential opportunities it offers, thus, securing their active

support in the implementation of the Agreement.

Committee of Senior Trade Officials (Part III Article 12)

The Committee of Senior Trade Officials shall consist of Permanent or Principal Secretaries

or other officials designated by each State Party.

Subject to directions given by the Council of Ministers, the Committee of Senior Trade

Officials shall meet at least twice a year and shall operate in accordance with the rules of

procedures as adopted by the Council of Ministers.

The Committee of Senior Trade Officials shall:

(a) implement the decisions of the Council of Ministers as may be directed;

(b) be responsible for the development of programmes and action plans for the

implementation of the Agreement;

(c) monitor and keep under constant review and ensure proper functioning and development

of the AfCFTA in accordance with the provisions of this Agreement;

(d) establish committees or other working groups as may be required;

(e) oversee the implementation of the provisions of this Agreement and for that purpose, may

request a Technical Committee to investigate any particular matter;

(f) direct the Secretariat to undertake specific assignments; and

(g) perform any other function consistent with this Agreement or as may be requested by the

Council of Ministers.

PROSPECTS OF THE AFCFTA.

The African Continental Free Trade Agreement (AfCFTA) is an innovative project that has

the potential to change Africa's economic landscape. The AfCFTA presents enormous

potential for fostering economic growth, regional integration, and sustainable development by

uniting the continent's markets. In-depth analysis of the AfCFTA's possible outcomes and

opportunities for African countries is provided in this report. The AfCFTA is a transformative

force for the future of Africa, promoting economic diversification, job creation, intra-African

investment, and greater continental integration. For the African continent, the African

Continental Free Trade Agreement (AfCFTA) offers a wealth of options and possible

advantages. The following are some significant AfCFTA prospects:

1. Economic Growth and Development.

The AfCFTA's central promise is that Africa will see rapid economic growth and

development. The deal enables more intra-African trade and investment by creating a single

market with more than 1.3 billion people and a combined GDP of over $3 trillion. This

increase in trade flows could encourage economies of scale, increase productivity, and
improve competitiveness, ultimately fueling economic growth and opening up job prospects.

Furthermore, by placing a strong emphasis on trade diversification, the AfCFTA can help

African nations break their dependence on conventional commodities and promote the

growth of new industries, which will support long-term economic growth.

2. Trade Diversification and Market Access.

Through extending trade beyond conventional commodities, the AfCFTA seeks to diversify

African economies. Greater market access for goods and services across member states is

made possible by the agreement's reduction of tariffs, elimination of non-tariff barriers, and

simplification of customs procedures. This promotes the creation and export of a wider

variety of goods by African nations, increasing trade diversification and fostering the growth

of new sectors. This approach paves the way for greater market access for goods and services

among member states, enabling African countries to broaden their export base. By facilitating

trade diversification, the AfCFTA promotes the development and exportation of a wider

range of products, which in turn contributes to enhanced economic resilience and reduced

vulnerability to external shocks. Moreover, increased market access offers opportunities for

small and medium-sized enterprises (SMEs) to participate in regional and continental value

chains, fostering their growth and contributing to inclusive economic development.

3. Job Creation and Poverty Reduction:

One of the prominent prospects of the AfCFTA is that it has the potential to generate

substantial employment opportunities, particularly in sectors with high potential for growth

and value addition and contribute to poverty reduction. By expanding market access and

promoting industrialization, the agreement can stimulate job creation across various sectors

such as manufacturing, agriculture, and services. The growth of these sectors generates

formal employment opportunities, particularly for Africa's burgeoning youth population.

Increased employment opportunities can contribute to improved living standards, economic

empowerment, social inclusion and inclusive development across the continent. Furthermore,

by promoting inclusive economic growth, the AfCFTA has the potential to reduce poverty

and inequality, leading to more equitable development outcomes.

4. Gender and Youth Perspectives.

The AfCFTA can promote gender equality and women and youth empowerment,

fundamentally driving national, continental and global sustainable development outcomes.

The establishment of the AfCFTA will create new trading and entrepreneurship opportunities

for women across the key sectors of agriculture, manufacturing and services. The boosted

demand for manufactured goods will encourage larger export-oriented industries to source

supplies from smaller women-owned businesses across borders, while the opening of borders

will increase opportunities for women to participate in trade through reconfigured regional

value chains and more easily meet the standards of continental markets.

It is estimated that the AfCFTA could make small contributions to closing the gender wage

gap, thanks to the resulting increases in wages for women (10.5% by 2035), being marginally

larger than those for men (9.9%). Employment gains are expected in agriculture, one of the

principal sectors driving African economies, in which women represent about half of the

labour force. The projected 1.2% increase in employment expected to result from the

establishment of the AfCFTA (although small) will also reduce the high levels of youth

unemployment, helping to engage some of the continent’s 252 million young people in

productive activities. The African Union Protocol on the Free Movement of Persons could

help to tackle the skills shortages underlying the under-employment and unemployment of

young people. The reduction in the cost of trade will incentivize the creation of small- and

medium-sized enterprises for the many young people employed in the informal economy,

which accounts for around 90% of jobs in many African countries, and for women working
as informal traders, who constitute up to 70% of that sector, through entrepreneurship, e-

commerce and trading through formal channels that offer more protection.

Notwithstanding this potential, gains will not be automatic. In order for the benefits of the

AfCFTA to be inclusive for women and young people, countries must diversify their exports

to build resilience to changes in demand, move to higher-value-added products and services

with improved wages, and include small- and medium-sized enterprises in accessing new

markets while encouraging innovation and improving productivity. Maximizing the benefits

of the free trade area will require an inclusive approach to the implementation of the AfCFTA

Agreement. To this end, ECA is supporting the process of gender mainstreaming in the

design of national AfCFTA implementation strategies and public–private dialogues to

facilitate inclusive implementation of the Agreement. This process is guiding the

development of gender-responsive complementary policy reforms to advance women’s full

participation in the process of rolling out AfCFTA, and as part of the solution to post-

pandemic recovery efforts. Digital approaches to trade facilitation will help to reduce the

scope for gender or age-based discrimination. Ensuring equal trade and economic

opportunities will ensure that the establishment of the AfCFTA serves as a milestone for

inclusive socioeconomic development on the continent.

5. Intra-African Investment and Technology Transfer:

The AfCFTA encourages intra-African investment by providing a predictable and conducive

business environment. As trade barriers are reduced and regulatory frameworks are

harmonized, businesses are more likely to invest in neighboring countries, leading to

increased intra-African investment flows. Moreover, the agreement promotes technology

transfer and knowledge sharing among member states, facilitating innovation, and fostering

industrial development. This increase in intra-African investment flows strengthens economic

cooperation and creates synergies among African nations. Furthermore, the AfCFTA
promotes technology transfer and knowledge sharing, facilitating innovation and fostering

industrial development. African countries can leverage these opportunities to enhance their

competitiveness, boost productivity, and promote sustainable economic growth.

6. Cross-Border Infrastructure Development:

Infrastructure development plays a pivotal role in the realization of the AfCFTA's prospects.

By improving cross-border infrastructure, such as transportation networks, logistics systems,

and digital connectivity, the AfCFTA can overcome physical barriers and facilitate smoother

trade flows. Investment in infrastructure projects, including roads, railways, ports, and

telecommunications, will enhance connectivity and reduce transportation costs. Additionally,

the development of digital infrastructure and e-commerce platforms will facilitate cross-

border trade and promote the growth of the digital economy. Such infrastructure development

will unlock the full potential of the AfCFTA by creating an efficient and seamless trading

environment.

ORGANIZATIONAL CHALLENGES OF THE IMPLEMENTATION OF THE

AFCFTA

1. The Global Neoliberal Regime.

The neoliberal economic framework's global consolidation is another aspect that will provide

an existential threat to the growth of the African free-trade area. In general, this paradigm has

been used to place African economies, primarily through the World Bank, the International

Monetary Fund (IMF), and the World Trade Organization (WTO). It will be difficult for the

proposed free-trade region to overcome the impeding effects of these neoliberal institutions,

which were established to further the opening up of global markets for Western exploitation,

in countries with very weak economies.

Prior to the Uruguay Round Agreements of the GATT trade negotiations and the subsequent

establishment of the WTO in January 1995, the Bretton Woods institutions (the IMF and the

World Bank) were the principal economic instruments through which foreign capital forces

the deregulation of (and gains access to) African economies. In Africa, these Bretton Woods

institutions have demanded economic liberalization as a condition for granting loan facilities

to countries with depressed economies. This strategy for liberalization includes the demand

for the deregulation of capital, trade, and labor; privatization, retrenchment of public servants,

austerity measures, and a massive reduction in government spending (with the attendant

introduction of user fees in critical public sectors). The praxeological claim of this neoliberal

thinking is that a weakened public economy will engineer the growth of the private sector as

the real facilitator of economic development. However, contrary to this supposition, the

immediate and long-term consequences of these policies have been the further devastations of

the economies concerned and an expansive ecology of poverty in African countries where

this form of economic restructuring has taken place. This has created the enabling

environment for foreign capital to take over and dominate the economies of most African

states. The GATT Uruguay Agreements and the establishment of the WTO have since

exacerbated the deregulation of African economies for foreign exploitation. The Uruguay

Round Agreements further sought to deregulate the global economy by lifting restrictions on

foreign investments; ensuring free trade in goods and services and protecting trade in

intellectual properties. The WTO was established principally to advance these neoliberal

objectives. Increased deregulation along the neoliberal fault line has devastated African

economies, created mass poverty and brain drain as well as an increased migration trend in

which young Africans risk their lives (and sometimes die) across the Sahara Desert and the

Mediterranean Sea in desperate attempts to get to Europe to escape poverty in their

homelands. Those who could not escape this economic stranglehold continue to suffer
devastating hardships from an economic structure designed to advance the foreign plunder of

African resource wealth. The Western extraction industry represents most cogently one of the

most predatory forms of this plunder in modern Africa. Apart from the well-documented case

of the pillaging activities of transnational corporations in the Nigerian petroleum industry, the

extraction of copper in Zambia represents another striking example. Zambia's copper industry

was originally owned and operated by the Zambia Consolidated Copper Mines Limited

(ZCCM), which until April 2000 belonged to the Zambian government. It was the country's

biggest commercial enterprise and a major source of foreign exchange for the state. However,

facing an economic downturn and under pressure from the IMF and the World Bank to

privatize the company as a condition for a loan, the government in the early 1990s started the

process of unbundling the company and, in 2000, completed the privatization process as

demanded by its foreign donors. In 2000, the copper industry was privatized and sold to

Mopani Copper Mines Plc, which although was registered in the country, actually belongs to

Glencore Pic, a British transnational corporation based in Switzerland. This company

controls 73.1 percent of Mopani's. However, contrary to the expectation that Zambia would

benefit from the privatization of this company, the Mopani Copper Mines Plc has used a

covert network of profit transfers and tax avoidance, known commonly as transfer pricing, to

avoid paying the appropriate taxes to the Zambia government. The Zambian Revenue

Authority has since 2009 battled Mopani Copper Mines Plc and its parent company, Glencoe,

over lost tax revenue and, only recently, won $13 million of lost revenue in the country's

Supreme Court. Nevertheless, despite the continuing government efforts to recover taxes

from Glencõe and its subsidiary, the company still controls the copper industry, the country's

key, and greatest foreign exchange earner. Whether in Zambia, Nigeria, or other African

countries, the global neo-liberal regime has handed the key sectors of African economies to

foreign firms. It is worth pointing out, therefore, that in the emerging continental free-trade
area, these foreign firms through their domestic subsidiaries will continue to dominate the

African market. With comprador leaders across most of the continent, these foreign

corporations will also continue with their strategies of resource plunder, tax avoidance, and

profit transfer, thereby undermining the AfCFTA's most strategic objective of transforming

and repositioning the economies of the continent into major competitors in the world market

to search.

2. Influence of Chinese in the Continent.

The massive economic presence of China on the continent is also certain to provide a

significant challenge to the proposed free-trade region. China has aggressively increased its

investments and consolidated its power in Africa since the late 20th century. Many African

states have received loans from it that are both low-interest and interest-free (but typically

collateralized). It has made significant investments in infrastructure projects like roads, trains,

and airports all over the continent. In addition, China helped finance the building of the new

African Union Commission in Addis Abeba, Ethiopia, and established its first military

outpost there in Djibouti. With annual commerce of more than $200 billion, it is currently

Africa's largest trading partner, displacing other significant economies. It is estimated that

more than 10,000 Chinese firms operate currently in the continent, with a value of over $2

trillion. It is also noted that Africa has displaced Asia as the biggest market for China's

construction contracts overseas. Recently, China announced a Belt and Road Africa

infrastructure development fund worth $1 billion and an additional $60 billion aid package

for African countries. The Belt and Road infrastructure fund is designed to overcome

physical and digital infrastructure deficits across Eurasia and Africa. It targets several

kilometers of construction in new highways and rail lines, as well as power plants, airports,

and telecommunication systems.

Most of these investments are completely controlled by Chinese companies, while others rely

on joint ventures between Chinese companies and the nations they are operating in. Chinese

traders have also inundated African markets with inexpensive (and occasionally subpar and

fake) goods, forcing out local businesses. Chinese immigration to the continent is at an all-

time high, and new Chinatowns are establishing themselves all over the continent as part of

an insurgent conquest of African economies. By 2014, over one million Chinese people are in

Africa building what some have described as "a new empire". The Chinese Mandarin

language and culture are gaining ground particularly among the youth in many African

countries, funded mostly through the quasi-imperialist Confucius Institute.

However, most importantly, China has entrenched its economic interests in Africa through a

series of free-trade zones it has secured from several African states. In Nigeria, the Lekki

Free Trade Zone in the country's megacity, Lagos, is being developed in collaboration with

Chinese investors to get foreign investors, particularly from China, to move their

manufacturing to Nigeria. The first phase of this project will cost $5 billion and cover an area

of 3,000 hectares of land. While the Lagos State government of Nigeria holds 40 percent of

this investment, the other 60 percent is held by Chinese investors. Construction on this free-

trade zone, which started in 2007 as part of a strategy to consolidate economic and trade

cooperation between China and Nigeria, has gone to an advanced stage and a few Chinese

companies have started operations in the area. Similar functional Chinese free-trade zones,

industrial parks, and export processing zones have also been developed in many other African

countries, including Djibouti, Ethiopia, Kenya, and South Africa. In these free-trade zones,

Chinese companies are offered exemptions from taxes and tariffs as incentives to move their

companies to Africa. They also receive other financial incentives and business benefits,

which are often not extended to indigenous corporations. Unarguably, China has become an

indispensable economic behemoth in Africa. Given its entrenched economic interests and
investments and the multi-year management contracts it holds for many of its infrastructural

investments in the continent, it is hard to see how Chinese investors and merchants will be

displaced or excluded from participating both actively and dominantly in the emerging

African free-trade area.

3. Coordination among Member States:

The AfCFTA involves 54 African Union member states, each with its own economic,

political, and regulatory systems. Coordinating and harmonizing policies and procedures

among these diverse countries can be challenging. Ensuring effective communication,

consensus-building, and cooperation among member states requires strong institutional

mechanisms and sustained engagement.

4. Dispute Settlement Mechanism

The creation of an impartial and effective institution is necessary for the dispute settlement

mechanism of the AfCFTA to operate effectively. There are significant obstacles to

overcome in developing the required capability, finding qualified candidates, and

guaranteeing the availability of financial resources.

5. Infrastructural Deficits

Inadequate infrastructure, including transportation networks, energy supply, and digital

connectivity, hinders efficient trade flows within Africa. Limited infrastructure capacity and

poor connectivity increase transportation costs, result in delays, and limit the movement of

goods and services. Addressing infrastructure deficits and investing in cross-border

infrastructure projects are necessary to unlock the full potential of the AfCFTA.

6. Trade Imbalances and Unequal Development.

African countries have varying levels of economic development and industrial capacity.

Some countries may face challenges in competing with more advanced economies, leading to

potential trade imbalances. Addressing these imbalances and ensuring equitable development
across the continent will be essential to ensure that the benefits of the AfCFTA are shared by

all member states.

7. Political and Geopolitical Considerations

The AfCFTA involves navigating complex political dynamics among African countries and

managing potential geopolitical tensions. Ensuring political commitment and cooperation

among member states is crucial for the successful implementation of the agreement.

Engaging in diplomatic dialogue, addressing concerns, and fostering a spirit of collaboration

will be necessary to overcome political challenges.

CONCLUSION.

In view of its functional mandates, possibilities, and difficulties, this study has carefully

examined the legal and institutional foundation of the Africa Continental Free Trade Area.

The AfCFTA idea is certainly admirable, but there are legitimate concerns about its

practicality and success. If the political institutions are burdened with strict regulations that

encourage deadlock in the decision-making process, good legislation cannot be implemented.

Good laws also don't enforce themselves. They call for efficient enforcement measures.

Making AfCFTA law immediately applicable to member states' domestic law can help with

law enforcement.