This time lucky for regional integration?
“Posterity will recall this day.” So said former African Development Bank president Donald Kaberuka in April, marking Gambia’s ratification of the African Continental Free Trade Agreement (AfCFTA).
The West African country became the 22nd to ratify the agreement, launched in March 2018, reaching the minimum threshold needed for it to come into force.
The AfCFTA is Africa’s most ambitious attempt yet to kick-start regional integration and trade. Its objective is nothing less than to unify the continent’s eight regional economic blocs into a single market of 1.2bn people, worth up to $3tr.
The first phase is a commitment by the 52 countries that have signed the AfCFTA to remove tariffs on 90% of goods.
Doing so could add up to $70bn to Africa’s GDP by 2040 according to the Economic Commission for Africa. Meaningful implementation could boost regional trade by 40% in the same period.
It is slated to become operational in July, fuelling hopes that it will transform the continent’s woefully low internal trade volumes of around 17%.
It’s a major milestone - on paper.
For one, ratification is not implementation.
A recent International Monetary Fund study on the agreement’s potential impact correctly points out that much more is needed than tariff reductions.
Improving trade logistics, developing infrastructure, and investing in human capital are all prerequisites for the AfCFTA to have a meaningful impact. These are core development challenges most of the continent is already struggling with.
The agreement’s ambition - while laudable - is also cause for concern. Harmonising trade across 54 countries is a daunting challenge - to put it mildly - and Africa has a poor track record when it comes to implementing cross-border initiatives which often fall flat due to a lack of political commitment.
The potential perils of lacking political support have already been demonstrated. Nigeria, Africa’s biggest economy, has yet to sign the agreement.
In short, the AfCFTA faces an uphill struggle. This doesn’t mean it can, or should, be dismissed. Africa only stands to gain from more meaningful integration, but policymakers must be honest about the enormity of the task ahead.
Let’s hope they’re prepared.