What is at stake for consumers in Africa free trade area?

African heads of states and governments during the African Union Summit for the agreement to establish the Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. AFP PHOTO  

By WANJA WANJIRU

Summary

• The AfCFTA will be largely producer – oriented with a focus on small and medium enterprises (SMEs) and the larger private sector.

In the past month, there have been detailed critiques and appraisals of the African Continental Free Trade Area (AfCFTA) from different corners.

Indeed the agreement is an embodiment of the Pan African dream towards economic, political and social integration.

Effective implementation of the AfCFTA will bring about much desired industrialisation, infrastructural growth, economic diversification, job creation, food security, regional value chain development and ultimate continental development.

Much like other Free Trade Agreements (FTAs), the AfCFTA will be largely producer – oriented with a focus on small and medium enterprises (SMEs) and the larger private sector.

The prevailing sentiments around it reflect this. For instance, the Kenyan cabinet specifically called upon the private sector to leverage the opportunities presented by the AfCFTA in relation to Kenyan exports.

Similarly, the African Union Commission (AUC) urged the private enterprise to wield the AfCFTA development agenda for greater opportunities and sustainable growth.

Conspicuously missing from the AfCFTA discussions is the aspect of consumer protection. Though its Protocol on Trade in Services recognises consumer protection, it is only within the preamble and not the substantive text.

Ironically, while Free Trade Agreements (FTAs) are ultimately designed to benefit consumers, trade interests take precedence at the expense of consumer interests. A 2016 study by audit firm KPMG found that a majority of the 1.2 billion plus Africans, especially those in sub-Saharan Africa, are extremely poor consumers.

Consequently, it is vital that the AfCFTA is inclusive of this significant group. In line with economic theory, the AfCFTA is expected to create a wider market that will ultimately translate into consumer welfare gains.

These gains include enhanced consumer choice, lower prices and improved quality of goods. Nonetheless, the AfCFTA should go beyond that and protect consumers through safeguarding their rights.

READ: Africa leaders ink largest free market treaty

Generally, consumers enjoy several rights such as the right to information, the right to safety protection, the right to the protection of economic interests and the right to redress. These rights are designed to protect consumers from unscrupulous vendors who may prey on consumers’ lack of knowledge or low bargaining power.

As Africa embarks on its CFTA journey, this is the opportune moment to ensure that it builds up a robust consumer protection framework. Globally, the European Union (EU) enjoys the most advanced consumer protection regulatory regime.

Primarily, the union’s membership is predicated on, amongst others, the acceptance of this regulatory regime.

Additionally, the EU imposes this regime on other countries through its international trade agreements. Other regional blocs in Asia (ASEAN and APEC) or in Latin America (OAS) also have elements of consumer protection within their framework but to varying degrees.

Further, the UN Guidelines for Consumer Protection provide a good source regarding consumer welfare and protection. Africa should import the best practices exercised by these institutions.

Wanja Wanjiru, Trade and Competition Department, CUTS International Nairobi.