The United States, Mexico and Canada trade with one another under a pact that replaced the long-standing North American Free Trade Agreement, or NAFTA. The Europeans have their single market and common currency. Southeast Asian countries have a free-trade agreement. And 11 Pacific Rim countries have formed their own free-trade group with the unwieldy acronym CPTPP.
But what stands to be the behemoth of global trade pacts is one you’ve probably not heard of: the African Continental Free Trade Area, or AfCFTA.
Its scope is enormous, comprising 54 countries, 1.3 billion people and a combined gross domestic product of $3.4 trillion. It covers a geographic area three times that of the United States — big enough to cover the United States, China, India and much of Western Europe combined.
And its ambition is breathtaking. It aims, in the next decade, to lift 30 million to 50 million Africans out of extreme poverty and boost incomes across the continent by $450 billion, a 7 percent gain. The AfCFTA was first agreed to in 2018, launched in 2021 and, in January, South Africa made the first shipment under the pact, sending refrigerators and freezers to Kenya.
If successfully carried out — the big “if” — it would go a long way toward fulfilling the dream of early pan-African leaders such as Ghana’s Kwame Nkrumah, who warned his fellow Africans at the dawn of independence: “We must unite now or perish.”
For a continent often seen to be at war with itself, a free-trade agreement would be a game changer.
In economically successful regions — North America, Europe, Asia — countries trade primarily with one another. That’s far from the case in Africa. Only about 13 percent of Africa’s trade is within Africa. (By contrast, Europe’s internal trade is around 60 percent.) African countries trade far more with Europe and, increasingly, with China than with one another.
But can Africa’s new trade agreement really transform the continent? Lessons from elsewhere are instructional, and give rise to caution alongside some optimism.
The first lesson is that it takes time before trade pacts are fully in place and the results become apparent. Europe’s first attempt at economic integration was something called the Coal and Steel Community, launched in 1952, well before I was born. It was 50 years later that I wrote about the final rollout of the euro to replace national currencies and the painstaking negotiations over the Treaty of Nice, which enabled the European Union to allow Eastern European nations to join.
The Southeast Asian bloc, known as the Association of Southeast Asian Nations, or ASEAN, likewise took decades to become fully formed and functional; it’s still a work in progress.
None of the world’s existing trade agreements eliminate tariffs entirely, or cover 100 percent of products. Countries are always fighting to keep exemptions for national products they want protected or consider “sensitive” — for instance, tropical fruits, coffee and rice in Southeast Asia.
Enforcing open trading rules is another challenge, requiring heightened customs controls and inspection regimes at porous borders where smuggling is rife.
Perhaps the biggest obstacle for African countries is their dismal infrastructure. The former colonial powers typically built only enough infrastructure to ship Africa’s natural resources from the nearest port to London, Paris, Brussels or Lisbon. They rarely built roads, railways or bridges to connect African countries to one another.
Nkrumah, who was leader of Ghana from 1957 to 1966, wrote in a 1963 essay titled “Why Africa Must Unite,” “Our few and negligible roads and railways lead, ultimately, to some port. In a sense they have become symbols of our economic subservience and our dependence on trade outside the African continent.” More than 60 years later, his lament remains depressingly accurate.
Also, African countries have reached various levels of development, from regional economic giants such as Nigeria, South Africa and Kenya to some of the poorest countries on Earth, including South Sudan, Burundi and Niger. I have reported on how difficult it has been for the E.U. to absorb the poorer countries of Eastern Europe, and ASEAN’s difficulties adding Cambodia, Laos and Myanmar to its bloc. The challenge for Africa looks even greater.
Creating a free-trade area typically goes hand in hand with easing travel restrictions, since businesspeople need to move freely across borders. In Africa, this is already starting to happen. Kenya, Rwanda, Gambia, Benin and Seychelles now allow visa-free entry to all Africans. South Africa dropped visa requirements for a host of African countries. And the eight-nation East African Community allows borderless travel for its members.
The easy movement of people has turned Nairobi’s run-down Eastleigh neighborhood into a vibrant commercial center filled with Somali traders hawking goods ranging from cheap clothing to Chinese-made cellphones to gold jewelry. And Eastleigh’s shiny new BBS Mall is filled with Somali-owned shops. But locals are now concerned about crime and potential infiltration by al-Shabab terrorists.
Similarly, South Africans complain bitterly about migrants from Nigeria, Malawi, Zimbabwe and Somalia arriving illegally to take their jobs. Some populist South African politicians have accused the ruling African National Congress of having an “open border policy.”
For all these reasons, it will probably take years, if not decades, for the AfCFTA to be fully put in place. Once in force, though, the pact could increase the flow of internal trade and regularize standards and regulations across the continent, making it easier for outsiders — including U.S. firms — to do business. And it could give Africa a unified voice in negotiating on the global stage.
The AfCFTA remains a far cry from a United States of Africa. But it can put Africa on a path to greater prosperity. On a continent awash in bad news, that’s something to cheer about.