In more than half of the African countries, the weighted average most-favored-nation rate exceeds 10%; in all others, except Mauritius (the only African country that actually has free trade), it exceeds 5%. In the case of effectively applied tariffs, the picture looks equally grim: most African countries applied higher, and sometimes significantly higher, tariffs than their ASEAN-5 competitors, not to mention the EU and the US. Only four members of the Southern African Customs Union (SACU), i.e. Botswana, Lesotho, Namibia and Swaziland, joined Mauritius in the low-tariff group.

In addition to tariffs, there are many non-tariff barriers (NTBs) that complement protective measures. In many cases, these barriers can effectively stop cross-border trade in goods and especially services. They are not easy to detect and measure, and we do not have estimates of their tariff equivalent.

In addition to explicit NTBs, such as technical barriers to trade (TBTs), sanitary and phytosanitary (SPS) measures, and certification, restrictions on the free movement of people should also be mentioned. African nationals require a visa to visit more than 75% of other African countries. North and Central African countries have the most restrictive visa policies for their neighbors (AEO, 2017).

Restricting the free movement of people limits trade, especially (but not only) services. Clearly, in a region where modern communication platforms and digital trade remain underdeveloped, the role of direct contacts between traders is important. Visas are also detrimental to cross-border shuttle trade and intra-African tourism. In this context, the signing of a protocol on the free movement of people in Kigali is good news. The bad news is that several important countries, such as South Africa (plus their SACU partners), Nigeria, Tanzania, Côte d’Ivoire, and all North African countries, have not signed the protocol.

In general, both tariff and non-tariff barriers strongly discriminate against intra-continental trade compared to trade with foreign partners. Developed countries, especially the EU and the US, offer lower import tariffs than neighboring African countries. In addition, almost all African countries benefit from the Generalized System of Preferences (GSP), i.e., unilateral trade privileges in the form of zero or very low tariffs offered by developed countries as a form of development assistance.

A complex network of regional agreements
In recent decades, African countries have entered into several, often overlapping, trade agreements aimed at promoting sub-regional economic integration. Most of these declared ambitious goals (building a customs union), and three of them (SACU, the West African Economic and Monetary Union [WAEMU], and the Central African Economic and Monetary Community [CEMAC]) were meant to complement existing (from colonial times) monetary unions. However, none of them included trade in services, and most did not address issues such as non-tariff barriers or investment regimes.

The sad story is that existing sub-regional trade agreements in Africa do not work or work only partially for various political reasons. The SACU seems to be a positive exception.

Poor infrastructure and logistics.
In addition to formal and informal trade barriers, poor infrastructure and logistics are another factor impeding intracontinental trade. Even a cursory glance at the economic map of Africa suggests the underdevelopment of transcontinental road and especially rail networks. Modern transport organization and trade logistics are rare. Bureaucratic and corrupt border and customs procedures, as well as numerous security risks (stemming from armed conflicts and organized crime) further complicate the transportation and transit of goods between and within countries. As a result, the cost of moving goods in African countries is five times higher than in the United States.

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Most intra-African trade consists of consumer items – food, beverages, tobacco, sugar, cattle, and meat. However, the growth of industrialization in some countries has been accompanied by an increase in trade in manufactured durable and short-term goods. There was also a large amount of re-export trade between coastal and inland states, especially in machinery, transport equipment, and spare parts.

The single currency and trade zones, which developed through the granting of preferences or the use of common currencies inherited from former colonial powers, include: The Economic and Monetary Community of Central Africa (CEMAC), which includes Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of Congo, is part of the larger CEEAC, which also includes Angola, Burundi, the Democratic Republic of Congo, and Sao Tome and Principe; The Economic Community of West African States (ECOWAS), composed of Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Ida; The Common Market for Eastern and Southern Africa (COMESA), consisting of Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe; East African Community, comprising Kenya, Uganda, Tanzania, Rwanda and Burundi; The Southern African Development Community (SADC), composed of Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe; and the Arab Maghreb Union (UMA), comprising Algeria, Libya, Mauritania, Morocco and Tunisia.

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The tools of the ACFTA include rules of origin, an online negotiation forum, tracking and removing tariff and non-tariff barriers, a digital payment system, and the African Trade Observatory, a platform for policymakers and the private sector to develop data-driven and evidence-based policies and solutions.

Africa has never lacked for economic and policy documents. The landscape of African trade and investment policy is littered with failed grand plans and ambitious political aspirations that never succeeded in establishing much-needed trade.

The Organization of African Unity, which became the African Union (AU) in 2002, was founded in 1963 in Addis Ababa, Ethiopia, with a huge emphasis on economic cooperation. It was said that Africa should not depend on aid from the global North, but develop through trade and investment. Hence the idea of developmental states. Despite this, little has changed in practice.

The FTAA recognizes existing trade agreements, allowing them to complement the ACFTA rather than compete with it. These include the African Growth and Opportunity Act, economic partnership agreements, and agreements with the WTO. However, the current elements of trade policy have failed to provide the impetus needed to kick-start Africa’s industrialization and economic development.

Moreover, the economic policies sponsored by the International Monetary Fund and the World Bank have not led to sustained growth, and structural adjustment programs have produced the worst results. Trade liberalization led to the collapse of most domestic industries, as their products could not compete with those imported from other countries. The privatization of state-owned enterprises made public sector goods and services too expensive for the continent’s poorest people.

It remains to be seen whether the ACFTA can transform the continent’s economies away from their dependence on commodity exports. According to UNCTAD, this dependence makes African economies vulnerable to price fluctuations in international markets. For example, low international oil prices have adversely affected Nigeria’s economy, and low spot prices for uranium led to the mothballing of the Langer Heinrich uranium mine in Namibia, accompanied by the loss of hundreds of jobs.

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Dictatorship and rampant corruption thrive in the post-colonial vastness of Africa. Countries are economically underdeveloped and heavily burdened by debt. Economies have not transformed since independence. Most African economies remain primary producers of agricultural goods, oil, gas and minerals and create very little, if any, value added. They are heavily dependent on foreign humanitarian aid. Unemployment is high, especially among young people, and most people earn a living in the informal sector. Poverty remains widespread.

The ACFTA is an African Union (AU) project designed to facilitate trade within the African continent. It was originally launched in 2012; its instruments are not yet fully operational. When it does, many argue that the project has the potential to transform the continent’s economy.

Support for the ACFTA by African countries since its launch, and especially since negotiations began in 2015, has been overwhelming – so far, only Eritrea has not signed it. Nigeria, Africa’s largest economy, initially had its doubts, fearing that the country would be flooded by cheap imports, but eventually signed the agreement.

African countries compete for the same international markets and duplicate each other’s efforts instead of specializing, pooling expertise and trading with each other.

The ACFTA is a multidimensional agreement covering trade in goods and services, investment, intellectual property rights, and competition policy. The ACFTA aims to “support and achieve sustainable and inclusive social and economic development, gender equality and the transformation of the signatory states.

Moreover, the agreement intends to “promote industrial development through diversification and development of the regional value chain, agricultural development and food security. According to the United Nations Conference on Trade and Development (UNCTAD), inter-African trade accounted for only 16 percent of total exports in 2017. The largest trader is South Africa, which imports refined petroleum products and exports corn and other goods. It is followed by Nigeria and Egypt, which exports crude oil and associated gas as well as clothing and textiles, and imports other products.

Globally, African trade accounts for only 2.6 percent, and trade is mainly with Europe.

Trade with India and China is also growing. The ACFTA aims to achieve transformation through various continental initiatives, including the Industrial Development of Africa, the Africa Infrastructure Development Program, the Action Plan for Boosting Inter-African Trade, and the Comprehensive African Agriculture Development Program. Other projects include the African Single Market for Air Transport and the free movement of people.

With the support of the AU and the UN Economic Commission for Africa (ECA), the ACFTA is promoted by ministers and heads of state and government. The agreement has its own secretariat located in Ghana.

By becoming fully functional, the ACFTA plans to increase inter-African trade by 50 percent by developing and promoting regional and continental value chains. The agreement is one element of the AU’s Agenda 2063 strategy for transformation and development, which will lead to the achievement of some of the Sustainable Development Goals of the 2030 Agenda.

The benefits of the Agreement include the growth of manufacturing and diversification in transition economies, including Ethiopia, Morocco and Rwanda, which have implemented policies of industrialization and manufacturing development. This means that small countries will be able to benefit from economies of scale and the huge market that the ACFTA will provide.

The agreement also contains provisions that allowed the struggling economies of Djibouti, Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe to benefit from reduced tariffs. According to the Global Manufacturing Competitiveness Index, South Africa, Egypt, and Nigeria now have the largest manufacturing industries on the continent.

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