A historic deal to smash down tariff barriers within Africa is
being braked by the coronavirus pandemic and a thicket of negotiating
problems.
The African Continental Free Trade Agreement (AfCFTA) was formally launched just over a year ago in a blaze of optimism.
The
accord—styled as the biggest free-trade accord in the world in terms of
population—gathers 54 out of 55 African countries, with Eritrea the
only holdout.
It aims to phase out all tariffs on
commerce on the continent of 1.2 billion people, a goal that backers say
could give trade a mega-jolt as only 15 percent of trade by African
nations is with continental neighbours compared to 70 percent with
Europe.
It was supposed to take operational effect on
Wednesday, July 1, but the timeline has slipped, under the complications
caused by the Covid-19 outbreak but also the slow pace of negotiations
themselves.
"Everybody can see, objectively, nothing
can be done on the 1st of July," AfCFTA's brand-new secretary general,
Wamkele Mene of South Africa, told AFP.
"Forty-two countries out of 55 in Africa are either in full or partial lockdown."
A
new date for January 2021 has been proposed by ambassadors at the
Africa Union's headquarters in Addis Ababa. The recommendation has yet
to be adopted by heads of state.
Mene cautioned that the proposed date is itself subject to change.
"It really all depends on the pandemic," he said.
Mene,
who was sworn in in March, himself works in Addis, as AfCTA's
headquarters in Accra, Ghana, have yet to open because of the pandemic.
Nigeria question
Talks
on the AfCFTA got underway in 2002 and inched towards an agreement that
officially began life on May 30, 2019 after it crossed a threshold of
ratification by at least 22 countries.
That number has
edged up to 28, and includes economic heavyweights such as South Africa
and Egypt, and middleweights including Morocco, Kenya and Ivory Coast.
But
Nigeria—the most populous country in Africa, with around 200 million
people—still has not ratified, nor have Algeria or energy exporter
Angola.
"I know that Nigeria is committed to the
agreement that we signed for the AfCFTA but of course Covid-19 has
caused a delay in almost everything," Nigerian Finance Minister Zainab
Ahmed said.
"So, we may have to revisit the effective period for which this will start."
In
a shock move last August, Nigeria dramatically closed off its borders
with neighbours, a move that it said aimed at preventing smuggling.
But
the step was carried out unilaterally and breached free-trade
agreements among members of the 15-member Economic Community of West
African States (Ecowas).
Devil in the detail
In
addition to this worrying mood music from a country that was an
enthusiastic backer at the dawn of the AfCFTA process, the effort to
breathe life into the pact is a huge negotiation task.
Among
the big questions that have to be thrashed out are the rules of
origin—the identification of the contents of a product that are the nuts
and bolts of any free-trade accord—and detailed timetables for scaling
back tariffs.
Then there is the task of figuring out
how AfCFTA should dovetail with eight existing regional organisations in
Africa, such as ECOWAS and the six-nation East African Community (EAC).
"The regional economic communities remain, including the customs unions in Africa such as the EAC, ECOWAS and so on," said Mene.
"They
remain with their intra-regional obligations that they have to one
another. We build on the liberalisation and the progress that those
regional economic communities have achieved already."
He said negotiations aim to scrap customs duties on 97 percent of products within 15 years.
According
to the International Monetary Fund (IMF), this would encourage
intra-African trade to rise by around 16 percent—an additional $16
billion (14.25 billion euros)—annually.
AfCFTA has raised fears of a destructive impact on small manufacturers and family farms if borders are fully opened to imports.
With such concerns in mind, a more progressive phase-out is being envisaged for less developed economies.
Tariffs on intra-African trade average 6.1 percent more than on exports to non-African countries.
But
Lumkile Mondi, a senior lecturer at the University of the Witwatersrand
in South Africa, said duty elimination is only one piece of Africa's
coveted single market.
Non-tariff bottlenecks to trade include poor infrastructure.
Europe's
internal market, constructed painfully over decades, has been knitted
together by motorways, railways, flight routes, energy pipelines,
telecom networks and so on.
In Africa, debt levels will be a handicap to creating these crucial links, said Mondi.
"African
countries themselves being highly indebted means integration is going
to take much longer to really be achieved," he said.
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