The coming into force of the Agreement establishing the African Continental Free Trade Area (AfCFTA) on 1 January 2021 is particularly significant given the impact of the COVID-19 pandemic on trade and the global economy. The AfCFTA presents an opportunity for traders, both large multinationals and small and medium-sized enterprises (SMEs), to trade across Africa through a liberalised market for goods and services. It is worth noting that one of the general objectives of AfCFTA is to create a single market for goods and services, facilitated by movement of persons (Article 3(a) of the Agreement). This consequently places free migration of persons at the heart of free trade.
The co-dependency between trade and free migration is therefore not unexpected. In Africa, trade is largely propagated through informal cross-border trade (ICBT). The United Nations Conference on Trade and Development (UNCTAD) defines ICBT as trade conducted between neighbouring countries by vulnerable and unregistered traders. In Africa, these traders are predominantly women and youth. ICBT is not necessarily illegal in terms of the nature of trade but fails to meet the formal requirements of recognised trade due to the lack of compliance to regulations on customs. Accordingly, a high percentage of about 30%-40% of trade in Africa is through ICBT to the point that some refer to ICBT as “Africa’s Real Economy”.
With this in mind, free migration presents at least three opportunities that would catapult Africa to greater economic prosperity. First, the recognition of informal cross border traders (ICBTs) and their inclusion to the continent’s formal economic matrix. Second, the alleviation of poverty through remittances. Third, building and growing the African economy by reducing reliance on the “colonial economic model”.
The recognition of ICBTs and their inclusion in the continent’s formal economic matrix
The recognition of ICBTs and their inclusion in the continent’s formal economic matrix has the potential of fast-tracking economic integration in Africa. ICBTs may be recognised through policy and legislatives approaches such as:
(a) Developing One-Stop-Border-Posts (OSBPs) across the eight regional economic communities (RECs) in Africa, each with trade facilitation desk offices (TIDOs). Through the TIDOs, trade facilitation officers would sensitise traders and collect information from small-scale traders which would be missed at the ordinary border post. This, therefore, would encourage formalisation of cross-border trade.
(b) Creating Simplified Trade Regimes (STRs) which will effect simplified customs documents, simplified clearance procedures, a common list of products, a threshold for the value of consignment and a common passport or pass for traders. STRs therefore ensure a reduction of clearance costs and encourage trade.
(c) Developing efficient regional payment systems. ICBTs require an efficient regional payment system such as the SADC’s Integrated Regional Electronic Settlement System (SIRESS), ECOWAS’s West Africa Monetary Zone (WAMZ) and EAC’s East Africa Payment System (EAPS).
Accordingly, ICBT has the potential to catapult Africa’s economy with the proper recognition and trade facilitation input.
The alleviation of poverty through remittances
The impact of the AfCFTA is expected to lead to the alleviation of poverty in Africa. The World Bank estimates that by 2035, full implementation of the Agreement could lift 67.9 million people on the continent out of moderate poverty. To achieve this, the interplay between free migration and free trade must be exploited for the benefit of the continent and its people. There is no doubt that an increase in economic migration leads to an increase in remittance flows. Thus, the liberalisation of goods and services in Africa must be complemented with free migration.
Building and growing the African economy by reducing reliance on the "colonial economic model".
It has been asserted that Africa's economic model follows the "colonial economic model", which is based on exporting primary products to countries in the North. The AfCFTA presents an opportunity to end this cycle of dependency by developing Africa’s economy through trade and industry. In particular, Article 6 of the Agreement makes provision for trade in goods, trade in services, investment, intellectual property rights and a competition policy.
The Word Bank estimates that whole and retail trade participation in total employment is expected to account for 20% growth by 2035 as the second most important employer on the continent. It is therefore expected that the full implementation of the AfCFTA Agreement and its Protocols and Annexes shall go hand in hand with the Protocol to the Treaty establishing the African Economic Community relating to the Free Movement of Persons, Right of Residence and Right of Establishment (FMOP) Protocol.
The FMOP Protocol serves as a complementary text as it makes provision for employment through the free movement of workers and the right of establishment, which grants nationals of member states the right to set up in the territory of the host state: (i) a business, trade, profession, vocation; or (ii) an economic activity as a self-employed person. Accordingly, trade in services as provided for in the Agreement is enhanced particularly when the Agreement is firmly implemented with the FMOP Protocol.
However, it is disconcerting to see that, to date, the launch of the Agreement has been met with little or no support for the FMOP Protocol. Since discussions on the FMOP Protocol commenced, progress has been slow: only 33 states have signed it and four states – Rwanda, Niger, Mali and São Tomé and Príncipe – have ratified it. Fifteen ratifications are required for the Protocol to enter into force.
Conclusion
From the foregoing, it is not in doubt that the launch of AfCFTA serves as a historical moment in African history. It brings about hope and delight to Africa’s renaissance and integration. It speaks of an African milestone in the making and signals continued innovation and trade, first within and among Africa. It is Africa’s long and victorious quest, particularly during the COVID-19 pandemic.
While the implementation of the AfCFTA is expected to take years, its success must be hinged on a complementary rather than a corollary outlook to free migration within the continent. Free migration offers complementing opportunities to trade such as the one-stop-border-posts with trade facilitation desk offices at each post, the alleviation of poverty through remittances and enhanced trade in services through the implementation of the FMOP Protocol. Thus, the full and successful implementation of the AfCFTA requires African states to give equal consideration to the FMOP Protocol and its ratification.
The opinions expressed in this article are those of the author(s) and do not necessarily reflect the views of SAIIA.
(Main image: Trucks wait in a line on the road to enter Uganda in Malaba, a city bordering with Uganda, in western Kenya, on 29 April 2020. – All truck drivers ferrying goods crossing the border from Kenya must take a test for the COVID-19 (the novel cornovairus) by Ugandan health officials and wait 24 hours to get the result. – Brian Ongoro/AFP via Getty Images)
