African continental free trade area (afcfta) hindered by politics in East Africa ~ Maseruka Sadat - Whisper Eye

African continental free trade area (afcfta) hindered by politics in East Africa ~ Maseruka Sadat

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The AFCFTA, once complete, will be a continent-wide free trade area for those states which have deposited instruments of ratification, It is called a ‘Free Trade Area’ but will be more akin to a comprehensive partnership agreement because the disciplines will go beyond trade in goods to over services, investment, competition and intellectual property[1].

With the objectives to create a single continental market for goods and services,with free movement of business persons and investments, and thus pave the way for accelerating the establishment of a continental customs union. It will also expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation and instruments across the regional economic communities (RECs) and across Africa in general. The AFCFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better allocation of resources.

Africa’s population is projected to rise to 2.5billion people by 2050[2] which comprise of the world’s working age population. The realization of the African continental free trade area is a dream near its realization if not marred by political interference. The aim of the pact that was signed by the 55 member states including Uganda At the Kigali Summit (21 March 2018), to accelerate intra African trade and boosting Africa’s position in the global market through strengthening Africa’s common voice and policy space in global trade negotiations.

With a market of over 1.2 billion people and a GDP of over 2.5 trillion across all the 55 member states, this could make it if implemented the world’s largest free trade area since the formation of the world trade organization[3].

The politics of the east African region is hindering economic progress. Currently traders are facing higher tax tariffs when they export within the region than when they export outside.

Tensions between Uganda and Rwanda are not making the situation any better this animosity that even culminated into the closure of the Uganda Rwanda border on February 28th 2019 and the exchange war of words between the two heads of state as president Kagame stating “you can attempt to destabilize our country, you can do harm, you can shoot me with a gun and kill me but there is one thing that is impossible you cannot bring me to my knees” and president Museveni is chest thumping saying “those who want to destabilize our country do not know our capacity. It’s very big; once we mobilize you can’t survive”[4] is not good for cross border trade for it curtails investment and access to market therefore threatening the spirit and aim of the African free continental trade area (AFCFTA)

With the closure of the Uganda-Rwanda border and the bad politics between the two heads of state, many small and medium enterprises that account for about 80% the region’s businesses lose their daily income yet they majorly operate on loans, they struggle to penetrate the markets in other countries[5] multinational campaniles making a lot of losses for example during the period of closure Uganda traders lost over 178 billion[6]; companies such as Roofing, Hima cement, Uganda breweries and a horde of cargo trucks and Lorries reduced from over 100 per day to 20 per day. Thus the revenue going to the respective countries reduced and ordinary traders dealing in foodstuffs and vending across the border lost business.

IT SHOULD be remembered that these two countries are signatories on the AFCTA protocol[7] that operationalized the free trade area in the initial 44 member countries, but what was not discussed are the probable consequences if a member country through its politics sabotages the operations of the agreement.

Therefore without political interference AFCFTA is aimed at progressively eliminating tariffs on intra Africa trade, thus making doing business in Africa easie[8]r. Africa largely exports extractive commodities so with the implementation of AFCFTA there will be trade diversification by encouraging a move away from extractive minerals towards a more balanced and sustainable base that will secure more sustainable and inclusive trade that is less dependent on the fluctuation of commodity prices. This will create more jobs for the youth in East Africa and Uganda because a shift from mineral extraction which is less labour intensive to manufacturing and agricultural processing that are purely labour intensive  

The east African economy has the potential to be the leading in Africa with the population of 433,904,943[9] people and between Uganda-Rwanda-Kenya-Tanzania-Burundi and south Sudan that make up the regional economic community of east Africa, trade would boom if focus is shifted to easing cross border trade by opening borders, concentrating on the comparative advantage one country has over the other especially in the agricultural sector, this will be a major employer of youth and women who are estimated to account for around 70% of informal cross border trade in east Africa but are vulnerable to harassment, violence, goods confiscation and even imprisonment[10].

Finally the African union as a continental body should be at the forefront in promoting and sensitizing political heads, civil society organizations and traders in African about the great need and benefits of having open borders as a continent because this will boost transnational infrastructural development projects such as roads, railways and other modes of transport to connect the whole of Africa[11].

MASERUKA SADAT

ECONOMIST VISION EAST AFRICA,

@MaserukaSadat


[1] This document is based on tralac’s understanding of the legal texts and modalities as of 1 June 2018. Updated on 11 February 2019.

[2] World population growth index and statistics

[3] African trade policy centre (ATCP)

[4] www.africanarguments.org

[5] Annual report of the public sector foundation (PSFU)

[6] Daily monitor

[7] The AfCFTA Agreement is the umbrella instrument

[8] Tariff Concessions, and Schedules of Specific Commitments on Trade in Services protocol

[9] World population review 2019

[10] African trade policy centre (ATCP)

[11] Decision on the draft agreement establishing the african continental free trade area (afcfta)

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