African Continental Free Trade Area Research Articles

African continental free trade area (AfCFTA): projected economic impact assessment under future warming in CMIP6

Launched on 1 January 2021, the African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a US$3.4 trillion economic bloc. The World Bank estimates that the AfCFTA could lift tens of millions of people out of poverty by 2035. Previous studies have shown that an increase in annual mean temperature can significantly affect economic growth. The AfCFTA economy will therefore be affected by future warming. However, without the AfCFTA, the impact of the increased annual average temperature on local economies could be severe, further depriving low-income African countries of economic recovery. To assess the damage to regional economic growth caused by future warming, trend analyses are conducted in the aggregated historical CFSR/NCEP and CMIP6 (GFDL-ESM4) climate projection data from 1979 to 2100 for different emission pathways over some major continental economic centres. The long-term impact of surface temperature increase on gross regional product (GRP) per capita growth rates are investigated by fitting CMIP6 daily and annual mean temperatures to a log-polynomial regression model. The results show that an increase in annual mean temperature will significantly affect the economic growth of low latitude and altitude regions compared to high latitude and altitude regions. Most emerging African economies and many member states of the African Union and AfCFTA are located in this low latitude zone. This makes the economies of the newly created AfCFTA very vulnerable to climate change. Several studies suggest that FTAs can help reduce the economic vulnerability of developing countries. The results presented here can contribute to better design and implementation of economic, trade and climate policies in the AfCFTA to mitigate the economic impacts of future warming.

Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa

AbstractThis study evaluates the potential impacts of the implementation of the African Continental Free Trade Area's (AfCFTA) tariff modalities on tax revenues, industrial production, trade flows, welfare and consumption for seven central African countries. Drawing on data from member states and the Global Trade Analysis Project (GTAP) database, two methodologies are applied in the study. Computable general equilibrium (CGE) and partial equilibrium (PE) are used to evaluate the long‐ and short‐term effects respectively. The results show that the reduction in tariff barriers provided by the AfCFTA will lead to a decrease in tariff revenue in some Central African countries in the short term. However, in the long term, these losses remain largely offset by the socio‐economic benefit issues generated by the implementation of the agreement, particularly in terms of economic growth and the well‐being of the region's population. To cub these revenue deficits, this paper encourages Central African countries to ratify and implement the AfCFTA. Also, they should diligently adopt all necessary reforms that could help reap the potential long‐term gains.

Negotiating the Intellectual Property Protocol under the Agreement Establishing the African Continental Free Trade Area: Priorities and Opportunities for Nigeria

Abstract Early March 2021, following its ratification of the Agreement Establishing the African Continental Free Trade Area (AfCFTA agreement), Nigeria’s National Office of Trade launched a consultative process into issues constituting the country’s priorities as it prepares to participate in the negotiation of the AfCFTA agreement’s protocol on intellectual property rights (IPRs). We contributed a position paper to that process, with a focus on key policy considerations that should form Nigeria’s negotiation priorities on IPRs. This article describes some of the most important points of our submission and concludes by stressing that the broad policy focus should be to champion initiatives that promote Nigeria’s national interest and, at the same time, recognize and accommodate the ideals of inclusiveness, openness, and collaboration within the context of the AfCFTA. In this regard, the paper recommends that Nigeria should prioritize negotiations in recognition of her strongest economic assets in copyright-related sectors and focus on institutional capacity-building for its patent and technology transfer offices so that Nigeria can effectively take advantage of the relevant Trade-Related Aspects of Intellectual Property Rights flexibilities locally. Nigeria can learn from South Africa in domesticating the appropriate legal framework for benefit sharing and the general protection of traditional knowledge and genetic resources. The Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore 2010, the Arusha Protocol for the Protection of New Varieties of Plants 2015, and the African Union model law for the protection of the rights of local communities, farmers, breeders, and for the regulation of access to biological resources offer relevant guidance.

Eliminating Non-tariff Barriers in the African Continental Free Trade Area: Lessons and Experiences from African Regional Economic Communities

Eliminating Non-tariff Barriers in the African Continental Free Trade Area: Lessons and Experiences from African Regional Economic Communities

EMPERICAL ANALYSIS OF THE QUALITY INFRASTRUCTURE IN TRADE FACILITATION WITHIN THE AFRICAN CONTINENTAL FREE TRADE

This study mainly focused on exploring the roles of standardisation and quality infrastructure systems in aiding trade and sustainable development within the African continental free trade area. This is a conceptual study. It was established that facilitating trade and sustainable development lead to attaining economic growth of any developing country. Several factors are involved in facilitating trade and sustainable development, including quality infrastructure and standardisation. These two factors foster free trade area establishment by eliminating trade barriers within the African countries. The factors can also assist speeding up the delivery time, reducing goods rejection at crossing borders, environmental protection by adhering to the ISO 14000 series of standards, add competitive advantages and many more. Despite all these benefits, African countries still are challenged regarding effective metrology institutes. To be able to foster a free trade area within African countries, each country needs to establish an influential metrology institute for carrying out all metrological activities which would provide assurance and global recognition to their products and services.

African continental free trade area (AfCFTA) trade vs. security dilemma: From borders perspective

Africa embarked on an ambitious and promising free trade area agreement. If applied fully, it can inject a magical potion into the lives of the African economies which currently seem doomed to economic ICU. The agreement is expected to induce intra-continental trade, industrialization, integration all mainly because of free movement of people and goods. Meaning, lowering border controls and checkpoints, but, here the free movement of people and goods can be problematic for the continent. As we all know, the availability of porous borders in the continent is one of the main causes of peace and security challenges of the continent. The article show the dilemma the continent will face to choose between security and economic advancement. Key words: African Continental Free Trade Area (AfCFTA), free movement, porous borders, dilemma.

A Possible Continental Free Trade Agreement in Africa for Trade Integration: The Perspectives Between Reality and Myth

With a view to intra-regional trade integration, African countries have decided to create an African Continental Free Trade Area (ACFTA) which should establish the rules and political guidelines necessary to promote intra-regional trade but the success of such political choice is conditioned by the degree of complementarity between the economies of these countries as well as their establishment in a win-win approach. In order to assess the prospects for the creation of the ACFTA and specifically on the Moroccan economy by integrating the specificities and potentials of African countries, the estimation of the potential has, however, shown the existence of a significant global potential for Morocco which can be exploited. To do this, the implementation of the ACFTA should allow the dismantling of tariff and non-tariff barriers under the condition of a great diversification of Moroccan products exported regionally which is necessary. The empirical study by integrating the gravitational model and economic variables for the period 2001-2019 on a sample of 50 African countries has made it possible to detect a potential to be exploited but the experience of failure of the already existing interregional communities presupposes a structural transformation of a commercial order, piloting by better diversity and integration of the production chain reinforced by good infrastructure and logistics, and of a political order by boycotting with historical factors and individualism for the benefit of a goal and a lucrative common identity for all countries.

Structural Constraints to African Continental Free Trade Area: Prospects, Issues and Policy Options

The foremost intents of the African Continental Free Trade Area (AfCFTA) predicates on the integration of the African continent into mobile flows of trade and investment. This framework is structured to boost industrial development within the continent. However, statistics show an abysmal trade performance for Africa in comparism to the rest of the world. In contrast, projections indicate that the benefactors of the AfCFTA framework would be SMEs in the short term, which account for more than 75% of the continent’s businesses. Notwithstanding Africa’s resolve to disassemble trade restrictions, barricades to intra-African trade have persisted. Conversely, the scheduling of AfCFTA stands in sharp contrast with an international perspective framed by a tenacious increase in trade-restrictive processes. The pertinent question remains, can the objectives of AfCFTA increase Intra African Trade, given the persistent structural barriers in the continent. Using a desktop approach and secondary data, this article examines contemporary issues, which encumber trade within and amongst the regional blocks. From our examination, the foremost obstacle to AfCFTA have a fundamental political focus rather than an economic dimension. Accomplishing AfCFTA objectives would entail a strong political will and efforts by political leaders in Africa; if the barriers are effectively fixed, AfCFTA could attain a welfare improvement projected at over 16 billion dollars.

The launch of the African Continental Free Trade Area

In 2018, 44 members of the African Union agreed to join a continental free-trade zone that, once operational, would create the largest market for goods in the world. Trading commenced under the agreement in 2021 with all but one African country agreeing (in principle) to participate. So far, however, few goods have changed hands under the terms of the agreement. Implementation problems include the fact that many states have not yet ratified the agreement, that a consensus has not been reached regarding customs documentation and rules of origin, that the quality of road and rail infrastructure on the continent is poor, and that non-tariff barriers to trade still persist.

The Effect of Trade on Economic Growth in Nigeria: Does Covid-19 Matters?

The occurrence of Covid-19 instigated direct and indirect effect on African economy especially Nigeria which was greatly hit. The movement of goods was severely affected as Intra-African trade was disrupted through the shutdown of ports, airlines, borders and businesses. The pandemic led to the lockdown of economic and social activities across the globe and impacted drastic economic downturn and disruption in global trade. Major economic activities were withheld and production of essential commodities was put on hold. In respect to these, this paper carried out a desk review of the effect of trade on economic growth in the era of COVID-19. Conventionally, trade accelerates economic growth but with global disruption brought about by the pandemic, it was envisaged that trade might not be able to stimulate economic growth for the active period of the endemic as many countries implemented locked-down policies. However, with the occurrence of the pandemic, most countries have realised the need to accelerate digital trade facilitation. Also, the need to have long-term trade-related technological investment and structural changes to possibly accommodate less contact during trade processes and facilitation. In conclusion, the outburst of the pandemic has further enlightened African nations on the need for the proposed African Continental Free Trade Area (AfCFTA) which was launched on 1st of January, 2021.

Tourism and Trade Nexus in Africa: A Gravity Model Approach

The tourism industry is now an important economic sector in Africa. However, as with trade, Africa’s global share of the tourism industry is quite small, which could be attributed to a similarly low level of both intra-regional trade and tourism. Prevailing data and studies suggest that there is a relationship between tourism and trade. The aim of this study, therefore, is to examine the empirical link between tourism and exports in Africa for the period 2006 to 2015. We estimate a structural gravity model using the Poisson pseudo maximum likelihood (PPML) estimator that allows for bilateral zero trade values between trading partners, controls for heteroskedasticity and addresses the potential endogeneity. We find that a 10 percent increase in intra-African tourism boosts the continental exports by between 1.4 and 3.2 percent. These results strongly posit that boosting regional tourism could be instrumental in catalysing intra-African trade, especially within the context of the African Continental Free Trade Area (AfCFTA).

A policy perspective for an integrated regional power pool within the Africa Continental Free Trade Area

The Africa Continental Free Trade Area presents an opportunity for the creation of a single continental electricity market in Africa. This market has the potential to promote the efficient development of electricity infrastructure and symbiotic electricity trading between members of Africa's five regional electric power pools. A framework is proposed to harness the opportunities presented by the African Continental Free Trade Area through the coordination of technical and commercial endeavors of the regional power pools in Africa. This includes fostering sharing mechanisms of best practices that support the development of national and international institutions, harmonizing regulations and grid codes, and promoting electricity trading opportunities that will catalyze the development of inter-regional infrastructure projects. In this paper, the authors propose a bilateral contract market that aligns with and complements the existing regional power pools without encumbering them with unnecessary bureaucracy. The paper's policy recommendations are designed to promote proactive adoption and compliance with the recommended best practices, market rules and regulations by market participants, motivated by their self-interests.

Déterminants et effets économiques de l'inflation dans la CEMAC

Objective: The objective of this paper is to determine the sources and economic effects of inflation in the CEMAC. Methodology: The data analyzed come from the World Bank (World Development Indicator, 2017). The study covers the periods 1977-1994, 1995-2016 and 1977-2016. Two equations (an inflation equation and a growth equation) are estimated by the Generalized Moments Method (GMM) of Arellano and Bond (1991). Results: The results obtained show that inflation does not promote economic activity and comes mainly from trade with the outside world. Originality/relevance: This study analyzes inflation from two aspects (the determinants and the economic effects). It highlights the phenomenon of imported inflation, the control of which would improve the economic situation of the CEMAC countries. In addition, the study identifies the clauses of the African Continental Free Trade Area, which entered into force in 2021, as a factor that could constitute, among other things, a palliative solution to reducing said inflation.

Intra‐regional spillovers from Nigeria and South Africa to the rest of Africa: New evidence from a FAVAR model

AbstractThe dominance of large resource‐rich hegemonic economies, most notably Nigeria and South Africa, with extensive trade and possible financial linkages, exposes other Africa countries to intra‐regional spillovers. However, this strand of empirical analysis remains largely unstudied, as extant studies are mostly devoted to investigating the implications of external (global) shocks. This paper contributes to the existing literature by investigating the extent to which shocks to economic growth in Nigeria and South Africa spillover to three regional bodies, namely Central African Economic and Monetary Union (CEMAC), Southern African Development Community (SADC) and Economic Community of West African States (ECOWAS). The paper distinguishes between trade and financial channels to identify these growth spillovers by using a two‐step FAVAR model. The results of the empirical analysis show that the trade channel is effective for growth spillovers from Nigeria and South Africa to the three regional blocs. However, we find no evidence of growth spillover from the financial channel, except between South Africa and the SADC region. The paper postulates that although the total intra‐African trade remains low, it remains an important channel for growth spillover in the continent. Thus, any initiative, such as the African Continental Free Trade Area (AfCFTA) should be encouraged, to expand trade in the continent.

Right to Development Governance in the Advent of the African Continental Free Trade Area

AbstractIn this article, I explore the question of whether the African Continental Free Trade Area (AfCFTA) could provide the framework mechanism for actualizing the right to development in Africa. The imperative for socio-economic and cultural development suggests rethinking the manner in which Africa is governed and, importantly, also the necessity of putting into place functional mechanisms in view of enacting the future that is envisaged for the continent. Article 22(2) of the African Charter enjoins state parties to individually or collectively undertake measures to give effect to the right to development. After several futile endeavours aimed at finding an appropriate mechanism for development, Africa eventually takes a giant stride in establishing the AfCFTA. From a decolonial perspective, I examine the prospects of the AfCFTA, particularly with regard to competing interests that dominate the African development space. At face value, the AfCFTA appears to provide an enabling framework for the nurturing of productive capabilities, the flourishing of local initiatives, the eradication of poverty and expanded opportunities for development. Notwithstanding, I contend that the inherently neoliberal nature of the AfCFTA leaves a further question of whether the free trade area is likely to deliver socio-economic and cultural development benefits to the peoples of Africa.

Belt and Road in Ethiopia and China’s African Ambition

China–Ethiopia economic cooperation in the period of 2000–2020 is marked by the convergence between the industrial policy of Ethiopia, the orientations of the Forum on China–Africa Cooperation (FOCAC), and the infrastructure development strategy which is the cornerstone of China’s Belt and Road Initiative (BRI). China, the largest foreign investor in Ethiopia during this period, has had a major role in terms of investment and financing in the energy sector and the transportation infrastructure: Addis Ababa Airport, roads, railway, seaport terminal, and gas pipeline. The flagship project — the Addis Ababa–Djibouti Railway — connecting Addis Ababa to Djibouti City and Djibouti’s Doraleh Container Terminal, inaugurated in 2018, provided landlocked Ethiopia with a good connection between the hinterland and the seaport: the economic corridor accounts for more than 95% of Ethiopia’s foreign trade. The development of Ethiopian Industrial Parks on the model of Chinese Special Economic Zones (SEZs) was the second pillar of the strategy of development of an export-oriented manufacturing sector. Chinese companies operating in Ethiopian Industrial Parks in the textile and leather industries have been pioneering this activity contributing to Ethiopia’s participation in the Global Value Chains (GVCs). Ethiopian government is also planning the development of agro-industrial parks specialized in added-value agricultural products such as coffee or cut flowers exported to Europe via Addis Ababa Airport and Ethiopian Airlines Cargo. Ethiopia’s main challenges in that direction are the necessity to go up the value chain to further penetrate European markets and, most likely, to identify the products or services which could be integrated into the African markets in the new context of the African Continental Free Trade Area (AfCFTA) agreement that entered into force in January 2021.

Impact of COVID-19 on Supply Chains in Zimbabwe

Zimbabwe like many other sub-Saharan African states has been struggling to provide a quality health service delivery system. Nations with rampant corruption and ineffective bureaucracy made worse, the response towards the fight against COVID-19, Coronavirus Disease 2019. Despite the Zimbabwean government setting out protocols with international agencies such as WHO, World Health Organization to mount an effective response against COVID-19, the health system has been overstretched with lack of personal protective equipment, shortage of drugs and essential equipment and wanton corruption practices coupled with shortage of staff. Timely delivery of orders is still a challenge due to strict bureaucratic measures when transporting goods and the existing competition between countries. Manufacturers and donors are shifting their focus to their countries leaving the Zimbabwean health service underfunded and under-resourced. However, among the challenges experienced the country has been given a chance to revisit its priorities and strategize how best the government and organizations can move essential medical goods, utilize current trade agreements such as ACFTA, African Continental Free Trade Area and local drug manufacturers to produce essential medicines. Launching an efficient mechanism to end corrupt practices in procurement and supply as well as improve interagency cooperation and communication may help improve efforts to end COVID-19 in Zimbabwe.

Reaping the AfCFTA Potential Through Well-Functioning Rules of Origin

The African Continental Free Trade Area (AfCFTA) Rules of Origin (RoOs) determine the conditions for the application of the Agreement’s tariff preferences. The effectiveness of existing preferential trade agreements within the continent is undermined by heterogeneous RoO regimes and costly trade facilitation procedures. If these issues continue unchecked, they could harm the realization of AfCFTA ambitions. Here, we first discuss the economics of preferential RoOs, highlighting their associated benefits and costs within and beyond the African context. Second, we focus on the implementation of RoOs under the AfCFTA. We contend that cost-effective implementation is crucial to the AfCFTA RoO regime for production hubs to benefit from integrated African markets. Capacity building, the adoption of new technologies, and the establishment of effective institutional mechanisms will be important to track progress on RoO implementation and ensure high preference-utilization rates under the AfCFTA. These efforts shall be complemented by targeted support to the least developed countries and to small and medium enterprises. Finally, we recommend a set of actions to ensure the impartial, transparent, predictable, consistent, and cost-effective implementation of the AfCFTA RoOs.

Contested Politics in Ethiopia, Post of 2018: Challenges and Prospects of the Ruling Party

The theme of this paper is to highlighting the political, economic, democratic, historical dilemmas and realities that occurred in the Ethiopian political system in 2018 through popular rebellion; futuristic hinders and chances of the ruling party to sustain its popularity and prosperity of the country. Talk of Ethiopia conjures a whole range of metaphors and contradictory perceptions and misconceptions. With the ascendance to power of Dr. Abiy Ahmed, as Prime Minister of Ethiopia on April 2, 2018, the strategic Horn of Africa country is back in the global limelight. The political excitement in Ethiopia has not yet died out even though there is guarded or cautious optimism. Part of the reason why there is such great excitement about both Ethiopia and current ruling party members is the manner in which the political transition took place. First, there were massive protests across the country that nearly tore the country apart. Second, Prime Minister Hailemariam Desalegn did the honorable thing and resigned amidst rising political tensions, supposedly to pave way for radical political reforms and to be part of such process. Analysts are still guessing what this process would be. What is well known is that the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF)--a coalition of ethnically based parties— painstakingly held lengthy meetings and finally settled for Dr. Abiy as the chairperson of the ruling party and subsequently was endorsed as the Prime Minister of Ethiopia. The rest, as they say, is history. While the current ruling party (PP) political honeymoon is still on, it is important to ponder and ruminate over the mythical and mysterious polity known as Ethiopia, which has puzzled scholars for centuries if not millennia. A lot has been written and will continue to be written about this fascinating African polity, popularly nicknamed the “Land of origins.” This is because of the archeological findings of the oldest hominid called “Lucy” or “Dinknesh” in Amharic. By this fact alone, Ethiopia is placed in an interesting historical epoch and stands in a class of its own in the entire world. Not to forget that Ethiopia also is very much talked about in the Biblical narratives right from the Old Testament (Cush in Genesis, Moses having married an Ethiopia in Exodus, the Queen of Sheba’s historical visit to Jerusalem to seek the wisdom of King Solomon, the Ethiopian Eunich of the Acts of the Apostles who was baptized by the Apostle Philip, after he had read from the book of prophet Isaiah). I will use Pan-African and Afro-Politian conceptual and theoretical frameworks to shed some light on Dr. Abiy’s Ethiopia in the broader global political economy. It is important to state right away that Ethiopia remains an enigmatic polity that defies clear cut categorization and conceptualization. One of the main goals for this piece is to start what will be a long discourse about Ethiopia amidst the current political trajectory that Dr. Abiy has embarked on, as a dynamic, forwarding looking, Pan-African, peace and security analyst and young leader. This is an aspirational and prescriptive approach since it is too early to tell what Dr. Abiy’s political and economic performance will be in the years to come. The continental context and mood are that of the much talked about Africa risingnarrative, Agenda 2063, Sustainable Development Goals, demographic dividend, African Continental Free Trade Area (AFCFTA), and the increasing attractiveness of Africa as a choice destination for foreign direct investment. Since Dr. Abiy’s Ethiopia is home to the AU, one cannot talk about the destiny and fortunes of one ignoring the other. Ethiopia is, in a way, the mirror of the entire African continent’s paradoxes and contradictions: (1) rich and complex cultural diversity; (2) simmering ethno-politics; (3) underdevelopment amidst enormous natural resources and financial illicit flows; (4) brain- drain amidst limited capacity; (5) nascent democratic and governance institutions; (6) tension between tradition and modernity; (7) centrifugal and centripetal political and economic forces; (8) tension between the sacred and the secular; (9) increasing gap between rich and poor; (10) Quest for home-grown solutions while heavily relying on foreign aid, foreign direct investment and imported goods and services. We can call these challenges as ten problems with African development. Fix them would bring new boom of prosperity light to all Africa in general and Ethiopia in particular.

Towards Implementing the African Continental Free Trade Area (AfCFTA) Agreement: A Framework to Address Bankability Concerns for African Infrastructure Projects

In order for the African Union to achieve the laudable trade liberalization and integration objectives of the African Continental Free Trade Area (AfCFTA) Agreement, Africa’s troubling infrastructure deficit remains a key challenge to be resolved. While Africa undoubtedly has a demand for infrastructure projects, and investors the world over have capital to invest, a lack of bankable infrastructure projects in which to invest has remained a key factor occasioning the widening deficit and hindering investment inflow into African projects. In this paper, I articulate the centrality of infrastructure to Africa’s free trade area initiative and then I explain the bankability problem with African infrastructure projects. Finally, I conclude by proffering a framework to resolve the bankability impasse, submitting that its successful implementation will eventually produce quality infrastructure projects that will provide the enabling environment for the AfCFTA to achieve its objectives.