increase total agricultural output by up to 4 percent.
79 A field study conducted by EASSI (2012: 21), looking at the five EAC Member States, revealed that agricultural products account for 42 percent of the total informal cross-border trade carried out by women. This was followed by textiles and consumables, which meanwhile account for 21 percent and 18 percent respectively.
80 For more information on the initiative, see AfDB (2019a).
CREATING A UNIFIED REGIONAL MARKET TOWARDS THE IMPLEMENTATION OF THE AFRICAN CONTINENTAL FREE TRADE AREA IN EAST AFRICA
Box 6: Anticipating Potential Objections to the AfCFTA
By Mr Andrew Mold, Acting Director, ECA Office for Eastern Africa
Objections to the implementation of the African Continental Free-Trade Area (AfCFTA) reflect honestly-held concerns about the bold policy initiative. However, they tend to be underpinned by a series of misconceptions:
1. “African countries all trade the same things”
This paints an excessively simplified view of trends in regional trade. It is true that East Africa is still heavily dependent on traditional export crops and commodities, even though diversification of exports has occurred over recent decades. This does indeed constrain the scope for mutually beneficial trade. However, the situation is beginning to change rapidly.
Section 2 demonstrated that the intra-regional component of trade is becoming much more diversified, with much higher shares of non-traditional exports and manufactured goods;
meanwhile, the traditional commodities exports are predominantly exported outside the continent of Africa (Na, 2019). The policy conclusion is clear – if the priority is to accelerate economic diversification, the regional route is the way to go. The AfCFTA is the way to deliver on this goal.
2. “AfCFTA is a ‘neo-liberal’ project serving the interests of big corporations”
Given the history of outside interference in African countries’ affairs, this is a logical concern.
The AfCFTA is indeed geared at boosting the levels of industrialization, intra-regional trade and investment. However, the framework is socially-oriented too. It seeks deeper regional integration and cooperation, with a view to making the continent economically stronger and more resilient. Precisely to prevent exploitation, it includes safeguards such as protocols on: competition policy, investment, intellectual property and the free movement of people.
AfCFTA is thereby designed to create a unified continental market that works to the benefit of all its citizens.
3. “How can the AfCFTA succeed while regional trade is actually declining?”
Although intra-African trade has been progressively rising over the last decade, there is no doubt that intra-regional exports have remained at low levels for most countries on the continent, accounting for an average of around just 16 percent of total exports, compared with an average in the European Union of 64 percent and 70 percent for Asian Pacific Economic Co-operation (APEC) countries. Indeed, within some African regional blocks, intra-regional trade has recently been stagnant or actually declining in recent years (Figure 5.7).81 There are several reasons for this: persistent barriers to trade in the form of high tariffs and NTBs; a lack of complementarity between regional economies; and physical hurdles that cannot be overcome because of the lack of infrastructure. However, the AfCFTA is a tool for alleviating precisely these trade inhibitors: it is an Africa-wide effort at reducing barriers and harmonizing economies, providing the incentive and framework to improve infrastructure in doing so.
81 For instance, within the EAC, there was a significant decline in intra-regional trade 2013-2018, whereas recently released figures show a recovery in 2018, with a rise in intra-regional trade within the EAC by 10 percent (see GTDW China, 2019).
SOME KEY SOURCES OF BENEFITS EXPLAINED
Figure 5.7: Intra-regional merchandise trade in Africa, 1995-2018
As a percentage of total trade
Source: UNCTADstat (2019)
4. “It won’t be implemented”
Admittedly, the history of non-implementation of international treaties and protocols in Africa has not been satisfactory to date. However, as mentioned above, there is a new sentiment that surrounds the AfCFTA, evidenced by the political support. The fact that 54 out of 55 African countries have signed in December 2019 shows that lessons have been learnt on this score. With almost every AU Member State committed to the AfCFTA, and the clear benefits well understood, there will be significant peer pressure to be pro-active in implementation.
Even more compelling is the fact that, of these 54 signatories, more than half (28) have now ratified the agreement through their national parliamentary processes; this categorically signals the seriousness with which member states are taking the AfCFTA. Among the general public, too, there are signs that there will be an important level of popular support to the AfCFTA. A survey of two thousand African citizens from across the continent carried out by the Rockefeller Foundation in November 2018 found that 77 percent of respondents were supportive of the formation of the AfCFTA.
To conclude, the rationale for greater economic co-operation and integration among African countries has always been strong. In today’s global economy, increasingly dominated by large economies and regional blocks like the European Union, the United States, China and India – and against a backdrop of increasingly pronounced trading tensions between them – those arguments become even more convincing. The AfCFTA presents a way to achieve that goal and create a more prosperous, economically resilient, continent.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
18 17 16 15 14 13 12 11 10 9 8
Figure 5.7: Intra-regional merchandise trade in Africa, 1995-2018 As a percentage of total trade
CREATING A UNIFIED REGIONAL MARKET TOWARDS THE IMPLEMENTATION OF THE AFRICAN CONTINENTAL FREE TRADE AREA IN EAST AFRICA