AfCFTA's ambitious plan - Opportunities and roadblocks ahead

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This flagship programme of the African Union promises to accelerate intra-African trade, foster industrialisation, and position the continent as a formidable player in global commerce. Achieving these objectives will necessitate a delicate balance between several critical priorities, including enabling seamless and efficient cross-border trade while ensuring robust and effective border security.

AfCFTA as a catalyst for growth

The AfCFTA creates opportunities for cross-border trade and investment as it enables trade on preferential terms for African-origin goods and services.

It harmonises trade across existing regional economic blocs, such as the Southern African Development Community (SADC), the Economic Community of West African States (ECOWAS) and the East African Community (EAC), creating a uniform trading framework.

The AfCFTA lays the foundation for a truly integrated continental market. The removal of tariffs on up to 90% of goods traded within the continent allows businesses to access a significantly expanded market while reducing costs.

Africa’s demographic profile characterised by a large youthful population and a growing workforce, positions the African continent as an attractive destination for investment and stands in stark contrast to the aging and shrinking populations of Europe, Japan and China.

The AfCFTA unlocks new opportunities to export value-added goods to more countries on the African continent particularly for countries which have a robust manufacturing sector such as South Africa. This will not only support economic growth but also employment creation and innovation along the value chain.

It will also enable it to access markets beyond the continent, which provide preferential access to qualifying goods manufactured in Africa.

Challenges to implementation

Despite its potential, AfCFTA faces several obstacles that require coordinated solutions. These include:

• Illicit trade and corruption at border posts, which inflate costs particularly for small traders and undermine the integrity of the trade ecosystem. More importantly, it creates a challenge to the national security of member states as unlawful movement of goods (including arms) and persons (criminals and terrorists) is facilitated by corruption and poor governance.
• Strengthening governance, ethics and accountability will be essential to build trust in the AfCFTA as an instrument for Africa's economic development.
• The emergence of the Alliance of Sahel States (an alliance of military led Burkina Faso, Mali and Niger), which not only raises questions about stability and security in West Africa but also throws into question the status of these countries in the AfCFTA following their reported withdrawal from ECOWAS.
• The lack of the infrastructure and technical expertise to implement AfCFTA protocols effectively in many member states, from outdated customs systems to inadequate technical skills for border personnel.
• Inadequate transport networks, ie. roads, railways, and shipping, hinder the efficient movement of goods. Addressing these gaps requires significant investment and collaboration between the public and private sector.
• The loss of government revenues will follow the removal of tariffs on goods traded among member states. This is a serious challenge particularly for those countries which are heavily reliant on customs revenues to meet fiscal commitments. To mitigate this threat, the AfCFTA Adjustment Fund will play a vital role in providing fiscal support.

Technology is one of the key enablers in implementing the AfCFTA

One of the most effective means of addressing challenges to the successful implementation of the AfCFTA is technology.

The use of tools such as electronic pre-clearance systems, digital trade platforms, and X-ray scanners is already reducing delays and increasing transparency, efficiency and design at borders in various parts of the world, including the People's Republic of China.

Closer to home, a notable success story is Zimbabwe’s Beitbridge border, where recent upgrades (including technological upgrades) have significantly reduced waiting times for trucks, enhancing trade efficiency.

The use of technology enables real-time monitoring and data sharing, which enhances accountability and reduces opportunities for illicit activity.

The Guided Trade Initiative is the lodestar

The early success in overcoming implementation hurdles, particularly, fiscal, national security and infrastructure concerns should build momentum and confidence in the roll-out of the AfCFTA. The Guided Trade Initiative as the first step in the practical implementation of the AfCFTA is expected to assist in the early identification obstacles and practical implementation of solutions to such obstacles.

Crime and risk to national security will not only undermine the implementation of the AfCFTA, but will also deprive member states and their citizens of the benefits which the AfCFTA promises to deliver. It is thus critical that particular attention is paid to border management and security.