The African Continental Free Trade Area (AfCFTA) stands as a beacon of hope, promising to radically reshape Africa's economic landscape.
With potential benefits that transcend mere trade, AfCFTA is poised to be the cornerstone of Africa's economic renaissance, ushering in an era of unprecedented prosperity.
The journey ahead is filled with opportunities and challenges, but the transformative is undeniable.
It is not just a trade agreement but a vision for Africa's future, a blueprint for creating a more integrated, resilient, and equitable continent.
As we look toward 2025, the path to realising AfCFTA's full potential is paved with strategic reforms, significant investments, and unwavering co-operation among member states.
A just-released report by the United Nations Economic Commission for Africa says that key strides have been made in developing regional value chains in Africa, particularly in industries such as food processing, pharmaceuticals, textiles, and automotive manufacturing. Infrastructure development remains a priority, with an estimated $120.8 billion needed in transport investments by 2030.
Furthermore, a push toward green energy could see Africa invest $22.4 billion in renewable energy infrastructure by 2040, ensuring that trade expansion aligns with sustainable development goals.
However, AfCFTA requires policy and regulatory reform to ensure its effectiveness. Member countries must align their national trade laws with the agreement's provisions, involving comprehensive reviews and amendments to existing regulations.
Clear national AfCFTA Implementation strategies must be developed and executed, involving stakeholders like businesses and policymakers. The private sector, tiny and medium enterprises (SMEs), is crucial for AfCFTA's success.
Africa's infrastructure deficit needs to be addressed, with investments in transport infrastructure and renewable energy required by 2030.
Additionally, digitalisation and trade facilitation are also essential for boosting intra-African trade. Harmonisation of trade policies and customs procedures across African countries is crucial. Climate-smart trade and sustainability must be integrated into AfCFTA's implementation strategy.
Robust monitoring and evaluation mechanisms are essential for effective implementation. Africa must also focus on expanding regional value chains to increase its competitiveness in global markets. By implementing these transformative strategic actions, AfCFTA has the potential to reshape Africa's economic landscape, making it more competitive, resilient, and inclusive.
While challenges remain, a strong commitment to reforms, investment, and cooperation will ensure that Africa fully capitalises on AfCFTA's opportunities.
Despite these efforts, AfCFTA faces challenges such as harmonising trade policies, poor infrastructure, inefficient customs processes, and inadequate digital connectivity. Non-tariff barriers and financial shortfalls also hinder progress. The agreement's success depends on policy reforms, infrastructure investment, and digital transformation.
Addressing trade facilitation issues, such as customs modernisation and digital trade platforms, could position Africa as a major player in global trade.
Africa's Regional Economic Communities (RECs) performance regarding continental trade under the AfCFTA is mixed, with some showing strong integration and others lagging behind. The AfCFTA agreement encourages RECs to maintain or improve their customs duty elimination and trade liberalisation levels.
The East African Community (EAC), Economic Community of West African States (ECOWAS), and Economic Community of Central African States (ECCAS) have played a central role in consolidating trade negotiation offers and assisting countries with limited resources.
However, trade between different RECs remains weak due to policy fragmentation and trade barriers. Intra-African services trade remained relatively low from 2012 to 2023 but has grown steadily, reaching $26.8 billion in 2023.
Despite challenges, RECs have the potential to serve as launchpads for AfCFTA's success by improving policy harmonisation and addressing trade barriers.
AfCFTA can learn valuable lessons from the European Union (EU) to improve regional integration and maximise economic benefits.
While Africa and Europe differ in their financial structures and levels of development, the EU's experience building a seamless single market offers key insights that AfCFTA can adopt to strengthen its implementation and effectiveness.
A crucial factor behind the EU's success is its strong institutional framework, which ensures compliance and enforces trade regulations. Institutions such as the European Commission, the European Parliament, and the European Court of Justice play significant roles in policy implementation, dispute resolution, and regulatory oversight.
Further, AfCFTA can benefit from establishing a stronger Secretariat with the power to enforce compliance among member states.
Creating an effective dispute resolution mechanism, like the European Court of Justice, would help resolve trade conflicts and ensure smooth transactions between African nations.
RECs, which serve as AfCFTA's building blocks, should also be given more authority and resources to facilitate trade at a regional level.
The AfCFTA represents a monumental step toward greater economic unity and strength across the continent. Its successful implementation hinges on comprehensive policy reforms, substantial investments in infrastructure, and the embrace of digitalisation and trade facilitation.
As member states leverage lessons from global trade entities like the European Union, the potential for AfCFTA to transform Africa into a thriving, competitive, and sustainable economic powerhouse becomes increasingly tangible. With an unwavering commitment to these transformative strategies, Africa is poised to overcome existing challenges and unlock unprecedented growth and prosperity.
This encapsulates a vision where intra-African trade flourishes and regional integration becomes a cornerstone of the con.
The Writer is Kenya’s Ambassador to Belgium, Mission to the European Union
