After suffering an unprecedented slow-down thanks to challenges occasioned by the COVID-19 pandemic, the African Continental Free Trade Agreement (AfCFTA) is raring to go again. Ghana’s National AfCFTA Coordination Office announced it was closing in on a trade engagement with Tanzania starting this month. Dubbed the “Ghana Expo 2023-Tanzania”, the meeting is set to oil the wheels of the AfCFTA idea.
Since the launch of the operational phase in July 2019, no significant trade has happened under the umbrella of AfCFTA, although official trading started in January 2021.
“Our aim is to create an economic environment where Ghanaians and Tanzanians can conduct business seamlessly while further strengthening our bilateral relations…We cannot trade with ourselves alone; thus, we need reliable partners like Tanzania,” Fareed Arthur, the Ghanaian AfCFTA coordinator, said.
AfCFTA is a long overdue idea founded on two main objectives: to promote gender equity and social transformation and to promote sustainable and inclusive socio-economic development. The success of these general objectives forms the foundation for realizing the seven core ones, including progressive liberalization of trade in goods and services and elimination of tariffs and non-tariff barriers.
Pinned under the ideological legacies of Julius Nyerere and Kwame Nkrumah – two of Africa’s foremost icons- this trade deal between Ghana and Tanzania will involve the exhibition of goods from both countries and the exploration of favorable policies through robust panel discussions and seminars.
AfCFTA has been hailed as one of the most consequential ideas designed in recent times for the economic emancipation of the African continent. If executed thoroughly, it is expected to significantly impact the African economy by connecting the continent’s 1.4 billion people with an estimated combined gross domestic product of more than $3.4 billion. Designed to create a single market that enjoys free movement of goods and services, AfCFTA is expected to eliminate 90 percent of tariffs, thus, basically, liberalizing trade in the continent.
As a revolutionary economic idea, the nascent trading bloc is expected to increase Africa’s global exports by $560 billion and intra-continental exports by 81 percent. Similarly, the agreement is estimated to generate a combined consumer and business spending of $6.7 trillion by 2030.
The economic reality on the “ground” might slightly dim the prospects of AfCFTA’s success. Africa accounts for just five percent of the global income despite making up 16 percent of the world population.
The IMF has observed that “half of African countries (27), with 44.6 percent of Africa’s total population, are categorized as low income. The remainder is distributed between lower-middle-income (18 countries, with 45.9 percent of the population), upper-middle-income (8 countries with 9.5 percent of the population), and high-income (1 country with 0.01 percent of the population)”.
At least 140 million youth in Africa aged between 15 and 35 are unemployed. According to the African Development Bank Group, 263 million young people in Africa will lack an economic stake in the system by 2025. While the unemployment rate in Africa has decreased from 11.7 percent to 10.6 percent in the last nine years, the economy remains unstable mainly. For example, Tanzania, which ratified the AfCFTA agreement in September 2021, had the lowest unemployment rate in the original East Africa Community (2.6 percent), followed by Uganda (2.9 percent) as of 2021. Kenya had the region’s highest unemployment rate (5.7 percent) during the same period.
The thing is, the question of economic crisis is not unique to Africa. The U.K. struggles with a rising inflation rate and the highest unemployment rate (3.95 percent) in almost three years. The United States – the world’s largest economy – has been battling an acute food crisis for the last three years, while the German economy – the largest in Europe – is expected to shrink by at least 0.4 percent in 2024 after suffering one of the sharpest recessions in its recent history.
China has had its fair share of the crisis, with the unemployment rate rising to around 5.2 percent in the first quarter of 2023. It is a global issue, the economic crisis.
The economic emancipation of the African continent will be primarily determined by the economic productivity of individual Africans in their respective countries. To realize the AfCFTA agenda, all the 44 countries that have ratified the agreement must find a way of making most of their populations economically productive.
Africa may indeed be “burdened by the deadweight of seeking unity with no serious coherence of developmental paradigms,” as Olufemi Taiwo puts it in Against Decolonization. However, the continent is experiencing a growing desire to reclaim its lost dream. And the AfCFTA is just one of the many paths crafted to take Africa, step by step, to the promised land.
Read more of economic insights here.