African Continental Free Trade Area Research Articles

The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences

The African Continental Free Trade Area (AfCFTA) entered into force in May 2019 after surpassing the required 22 ratifications. This article combines the decision support model (DSM) and the Global Trade Analysis Project (GTAP) computable general equilibrium (CGE) model to make quantitative assessments of the expected welfare and trade effects of the AfCFTA on Nigerian and South African sectors possessing sustained export potential within the AfCFTA member states. By specifying two scenarios of AfCFTA membership, the simulation results reveal positive welfare gains for Nigeria (USD 146.12 million) and South Africa (USD 1.46 billion), originating from the GTAP sectors identified with sustainable export opportunities in the AfCFTA member states. The trade deal is also expected to be net-trade-creating, with a net trade of USD 2.15 billion at the global level. The assessments in this article are valuable in informing trade policy in light of core export competencies and the size, growth and consistency of the import demand in AfCFTA countries. It is also the first time elements of a product-level export market analytical tool are harmonised with a CGE model in the welfare and trade assessments of regional and/or bilateral trade arrangements. Policymakers and export promotion associations in both Nigeria and South Africa are recommended to utilise the results found in this article as a point of departure in leveraging the welfare-improving sustained export opportunities identified within the AfCFTA.

THE THREAT OF TRADE-BASED MONEY LAUNDERING TO THE AFRICAN CONTINENTAL FREE TRADE AREA*

Africa has dedicated considerable effort to establishing a Continental Free Trade Area to facilitate intra-African trade and deepen economic integration. However, the liberalisation and facilitation of trade on the continent would increase trade openness significantly in the markets for goods and services, thereby expanding the threat of trade-based money laundering (TBML) and undermining the potential benefits the agreement would bring to economic growth, industrialisation and sustainable development in Africa. This paper focuses on the threat of TBML to the African Continental Free Trade Area (AfCFTA), typically perpetrated through trade mis-invoicing as the main vehicle for illicit financial flows. It deduces that increases in the volume of trade across the continent potentially increase the vulnerability of the AfCFTA to TBML.

Intersecções entre desenvolvimento e segurança a partir de processos de integração regional

The potential of the African Continental Free Trade Area (afcfta) has raised expectations in a wide range of areas. Among these, development and security stand out, as a strategic unit offering opportunities for the creation of new linkages in a competitive-cooperative logic. Elements from the most diverse fields offer a mosaic of possibilities, revealing optimism both within the continent itself and in other extra-regional states affected by the changes unleashed in the African environment. Methodologically, primary, qualitative and quantitative sources are used to test the hypothesis that integration processes can reverberate at the levels of development and security, which in turn contribute to supporting and reinforcing a pragmatic intercontinental mentality. At the same time, Brazil’s historical ties with Africa consolidate an environment of renewal of values rooted in ethnic, cultural, economic and psychosocial affinities.

An Analysis of the COVID-19 Consequences on the Uncertainty Socio-economic Indicators of Sub-Saharan Africa

This study aims to investigate the main sectors of economic development before and the current situation of COVID-19 for Sub-Saharan African countries by demonstrating country experiences, the role of vaccines, and the SSA economy forecast. The study has four main sections, including an introduction, an overview of socioeconomic indicators before the pandemic, methods, results findings, and discussion. The study used mixed methods, including an approach based on secondary data. The quantitative results were analysed using both empirical methods and the researcher’s prior expertise. The analysis of the effects of the COVID-19 pandemic on SSA countries was based on long-term data collected by several international financial institutions. The research findings demonstrated conclusively that COVID-19 is causing the collapse of the SSA economy, the first economic recession in 25 years, $37-79 billion in lost GDP by 2020, and an export decrease of 10.6%. In education, for example, 64% of primary and 50% of secondary students lack ICT training, 89% (216 million) do not have access to a home computer, and 82% (199 million) do not have an Internet connection missed classes during the COVID-19 period. The agricultural sector in SSA is also impacted by over 239 million hungry people. COVID-19 mass vaccinations and public debt amount to over $154 billion in obligations to get the SSA economy back on its feet with zero tolerance for embezzlement of public funds. These results can be used to make the economies of SSA countries resilient to the current crises and to address some thematic issues, such as the implementation of the African Continental Free Trade Area (AfCFTA) in all SSA countries, which will save time and money by getting rid of border taxes. Therefore, policymakers can use the findings to begin formulating plans to address issues like economic development, education, and food insecurity.

Supranational or cooperative? Rethinking the African Continental Free Trade Area Agreement Competition Protocol institutional design

Abstract African countries are currently negotiating the African Continental Free Trade Area (AfCFTA) Competition Protocol (CP) to regulate competition in the created continental market. However, the most daunting task for the negotiators and African countries is which institutional design to adopt at the continental level, pitying against a supranational or cooperative institutional model. Drawing from a dearth of literature on institutional designs, I propose two factors that African countries should consider when deciding on the most appropriate institutional design for the AfCFTA CP. First are the benefits and costs of each institution design building on the experiences of existing regional competition regimes. Second is the institutional context in which the AfCFTA Continental Competition Regime (CCR) will be established, which constitutes African countries’ attitudes towards supranational institutions, preference heterogeneity, and power distributions. The findings of this article show that African countries should establish a less ambitious institution design that will attract business and political acceptance.

Special Economic Zones in an Era of Multilateralism Decadence and Struggles for Post-Pandemic Economic Recovery: Perspectives from the Global South

AbstractRecent years have seen a proliferation of Special Economic Zones (SEZs) in developed and developing countries. Developed in Europe in its modern shape, most SEZs are located outside the continent today, notably in the developing world, where SEZs form part of these countries’ export-oriented growth policy tools and overall economic development. At a period of growing unilateralism and the return of the State as an economic actor, this contribution seeks to tackle the rise of SEZ laws in the global south, with a particular focus on Africa. It will scrutinize the reasons for their establishment, the measures chosen to promote them, and the international ramifications in these respective regions and broadly on the global plane, notably at the WTO. With the entry into force of the African Continental Free Trade Area (AfCFTA) Agreement, African countries face challenges of multi-layered SEZ governance, which this contribution intends to address. These challenges also extend to the cross-regional trade agreements these countries conclude, individually and as a bloc. Since SEZs are often assimilated with a category of subsidies and are discriminatory trade measures, this contribution, in essence, investigates the extent to which current trade rules at multilateral and regional levels address these controversial aspects of SEZs.

SADC'S transport infrastructure: enhancing the AFCFTA’s prospects through regional economic integration

There is considerable significance, associated with the fact that the African Continental Free Trade Agreement (AfCFTA) has the potential to lift 68 million people out of moderate poverty. If fully implemented, the AfCFTA is estimated to increase regional income by 7 % by 2035. Operationalizing and implementing the African Continental Free Trade Area strategy, including regulating the regional economies' transport infrastructure, requires a great deal of work. It is the purpose of this article to examine how Regional Economic Communities (RECs), such as the Southern African Development Community (SADC), can contribute to the AfCFTA.
 In comparison with other regional blocs, intra-SADC trade represents only 10 to 14 percent of member countries' total trade [1, 2]. Despite Southern African trade routes and infrastructure being among the best. In terms of infrastructure coverage, Southern African countries still lag behind the rest of the world, whether it's road and telecommunications technology (ICT), population density, or power generation. Whether at the national or regional level, these types of infrastructure weaknesses reinforce the infrastructure deficit and exacerbate unemployment, inequality and poverty in the region.
 For the purposes of this article, a qualitative approach is being used to examine primary and secondary literature, including statistics, reports, and journal articles. According to the results of the study, the REC's infrastructure strategy will positively affect trade and, in turn, boost AfCFTA by improving trade among member states. To spawn structural transformation and create transnational growth corridors capable of driving economic growth and technological advancement, new transformative strategies are required.

AfCFTA and Trade Facilitation in ECOWAS Borderless Region: Challenges and Prospects

This paper seeks to examine the establishment and ratification of the African Continental Free Trade Area Agreement (AfCFTA) as an endeavour on the part of the African Union to promote intra-African trade. The African socioeconomic development and industrial competitiveness is anticipated to increase as a result of the AfCFTA. The agreement is expected to link 1.3 billion people in 55 nations, with a $3.4 trillion global GDP. By 2035, it is projected to be able to save 30 million people from abject poverty. The AfCFTA will result in a significant liberalization of trade in products and services within Africa, making it simpler for business people to conduct international business and lowering trade costs. However, there are concerns that putting the agreement into practice successfully in a continent with limited capacity, uncompetitive industries, and reliable infrastructure will be difficult. The research relies on the secondary sources of data collection, which include the use of such materials as textbooks, journals, newspapers, magazines and internet sources. The paper analyses the political- economic dynamics and argues that the success of AfCFTA will be greatly influenced by a number of variables, including member states level of commitment, the availability of cutting-edge technology, technical capacity, and essential infrastructure, the transparency and accountability of processes, and how infractions and complaints are resolved.

The vacuity of informal cross-border trade facilitation strategies in the SADC region

In the Southern African Development Community (SADC) region, there is the discourse that trade facilitation programmes have opened borders for actors like informal cross-border traders. Examples used in this narrative include the African Continental Free Trade Area. This article takes a different view and asserts that these state-driven initiatives were limited because regionalism as SADC institutional project was not in sync with the everyday regionalization processes. Such processes demonstrate the fluidity and multidimensionality of regional integration, which transcend state-centric paradigms and this invokes an alternative explanatory framework and understanding of the bottom-up process of regional integration in an African setting.

Proposition for an AFCFTA-based Tax Dispute Court for the Timely Resolution of Commercial Tax Disputes

The African Continental Free Trade Area (AfCFTA) Agreement is promoted as a developmental game-changer set to foster an impressive growth in intra-African trade. Already, economic forecasts project that the successful implementation of the AfCFTA could boost intra-Africa trade and investments from the current 16 per cent to about 35 to 40 per cent by 2040. However, the success of the AfCFTA implementation is largely dependent on the willingness of its member states to carry out large-scale trade and investment reforms to reap the benefits of the free trade area. One area in dire need of reform is the tax dispute settlement mechanisms (TDSM) found in tax, trade and investment agreements. These mechanisms often act as technical barriers to the realisation of the AfCFTA objectives. This paper seeks to review the TDSM provisions contained in the tax, trade and investment agreements, including the newly drafted AfCFTA investment protocol. It also seeks to provide a comprehensive analysis of the challenges inherent in these instruments with the aim of offering solutions through a progressively binding AfCFTA tax court. The court will enhance the timely and equitable resolution of tax disputes in the AfCFTA and promote a more conducive environment for investment, trade and growth.

Awareness of the African continental free trade area socio-economic benefits as drivers of sport industry stakeholders′ expectations in Zimbabwe

Despite the proliferation of free trade agreements worldwide, few studies have examined how the supposed benefits of the agreements are interpreted, understood, and applied by those operating in the sport industry. In light of the recently operationalized African Continental Free Trade Area (AfCFTA) Agreement and in response to a glaring lack of research into the sport industry’s expectations arising from this Agreement, the present study analysed whether the awareness of the AfCFTA socio-economic benefits can be considered drivers of sports industry stakeholders’ expectations in Zimbabwe. Data analysis deployed descriptive statistical processes with tests for correlation to determine the relationship between the awareness of social and economic benefits of the AfCFTA on the expectations of the sport industry stakeholders. Consequently, the social benefits played a significant relative role when accounting for the stakeholders’ expectations compared to the economic benefits. The study provides insight into how the sport industry in Zimbabwe can take advantage of foreseen or unforeseen developments within its external environment, such as the AfCFTA, whose transversal benefits cut across the sport industry and can address both the country′s and its sport industry's present challenges.

Trade Trajectories of the East African Community (EAC) within the African Continental Free Trade Area (AfCFTA): Opportunities, Challenges and Future Prospects

Trade Trajectories of the East African Community (EAC) within the African Continental Free Trade Area (AfCFTA): Opportunities, Challenges and Future Prospects

The synergy between governance and trade openness in promoting female economic inclusion in Sub-Saharan Africa

The debate on the need for Sub-Saharan African (SSA) countries to increase female participation in the economic sector has intensified the coming into force of the African Continental Free Trade Area (AfCFTA) and good governance. This study investigates the joint effects of governance (comprising of political, economic and institutional governance) and trade openness on female economic participation in SSA. The study employs panel data of 42 countries in SSA for the period 1996–2020. The empirical strategy is the dynamic System Generalized Method of Moments (SGMM) estimation technique. The findings reveal that the single effect of trade openness on female economic participation is necessary but not sufficient. Hence, complementing trade openness with good governance further enhances female economic participation in SSA. In general, the joint effect of trade openness and good governance should be a concern for policy makers to promote female economic inclusion.

A Critical Analysis of the Cross-border Financial Crime Risks Inherent in the African Continental Free Trade Area

A Critical Analysis of the Cross-border Financial Crime Risks Inherent in the African Continental Free Trade Area

The Dispute Settlement Mechanism under the African Continental Free Trade Area as a Preserve of Elites – A Missed Opportunity for Regional Integration in Africa

The Dispute Settlement Mechanism under the African Continental Free Trade Area as a Preserve of Elites – A Missed Opportunity for Regional Integration in Africa

Impact of the AfCFTA Agreement on Customs Revenue: case of Togo

The problem of loss of budgetary revenues with the implementation of the African Continental Free Trade Area (AfCFTA) agreement remains a concern, especially for the least developed countries. The losses resulting from the removal of tariff barriers deserve to be assessed in order to allow public authorities to establish mitigating measures. Drawing from this perspective, this paper aims to quantitatively assess the impact that the AfCFTA agreement has on Togo’s customs revenue. Using the differential method of current and future tariff regimes, the results of the study estimate the total loss in Togolese customs revenue during the first three years of the implementation of the Agreement at 30.9 billion CFA. This loss represents up to 0.25 per cent of the GDP and 22.67 per cent of the customs revenue collected, which could further widen the country’s budget deficit, and consequently compromise the financing of its development needs. Faced with such a situation, the Togolese state should carry out major internal tax reforms and public policy, consisting among others of broadening its national tax base, promoting the facilitation of intracontinental trade, and supporting the private sector through financial mechanisms in order to contribute to their competitiveness in light of the competition from other foreign companies.

A Benefit-Cost Analysis of Increased International Migration of Skilled Labor in Africa and the World

AbstractGreater labor migration can establish more channels for information flows, directly contributing to faster economic growth and improved innovation and work. It can also expand international remittances, which can be invested by recipient households in home countries in education, entrepreneurship, and improved and sustainable agricultural technologies. At the same time, however, increased emigration of medical professionals and technical workers from poor countries can reduce quality of local services, innovation, health status, and productivity. This analysis attempts to quantify the economic benefits and costs of permitting an immediate 10% increase in the bilateral migration of skilled workers (physicians, engineers or science, engineering, technology, and mathematics workers, and other persons with advanced educations) among the nations of the African Continental Free Trade Area and, more broadly, among 25 global regions. Economic benefits include higher migrant incomes abroad, welfare gains in destination countries associated with higher economic efficiency, spillover productivity gains, and an improved ability of the younger and more skilled working force to support the needs of the wider population, resulting in higher national production. Benefits in source countries include productivity enhancements from two sources: (a) greater access to knowledge associated with more bilateral trade and investment and (b) the ability of local households to invest remittances in productivity-enhancing activities. Welfare losses in source nations include static efficiency reductions and a worsened demographic support capability. In Africa, the benefit-cost ratios range from 3.7 to 6.9; in the global analysis, 17 to 38.

Identifying and Reducing the Cross-Border Financial Crime Risks Inherent in the African Continental Free Trade Area

Identifying and Reducing the Cross-Border Financial Crime Risks Inherent in the African Continental Free Trade Area

The Emergence of African Continental Free Trade Area Agreement and Lessons from the Asia-Pacific Trade Agreement

The Emergence of African Continental Free Trade Area Agreement and Lessons from the Asia-Pacific Trade Agreement

Competitiveness and diversification of services exports in sub‐Saharan Africa

AbstractTrade in services has become the most dynamic segment of international trade. This paper examines the competitiveness of services exports in sub‐Saharan Africa (SSA) for the period 2005–2019 using revealed comparative advantage approach. The analysis shows that although SSA has a comparative advantage in traditional services, that is travel and transport, it has remained less competitive compared to other regions globally, and its share of world services exports is negligible. Moreover, SSA has not developed competitiveness in modern commercial services and, hence, continue to perform poorly. The results suggest only Nigeria and Kenya have so far developed comparative advantage in financial services. SSA's dismal performance of services exports can be attributed to various factors such as technological and infrastructure constraints, protectionist and regulatory barriers. There is need to rethink strategies of revamping and diversifying services esports to spur Africa's trade and economic transformation. These include leveraging the opportunities availed by the African Continental Free Trade Area (AfCFTA). Unexploited opportunities include Africa's rich cultural diversity, recreation, business and conferencing services.