THE AfCFTA AT FIVE

Five years after the commencement of trading under the African Continental Free Trade Area (AfCFTA) Agreement, the continent stands at a critical juncture in realising its ambitious economic integration goals. While the AfCFTA, encompassing 54 economies and 1.4 billion people, promises to transform intra-African trade and foster industrialisation, its true success hinges not merely on signed protocols or tariff reductions, but on tangible improvements on the 'factory floor' and at border posts. This article examines the AfCFTA's journey since trading officially began in January 2021, highlighting key achievements such as the operationalisation of its dispute settlement mechanism and the Guided Trade Initiative, alongside persistent challenges like non-tariff barriers, infrastructure deficits, and the crucial need for robust rules of origin to stimulate local manufacturing and regional value chains.

The African Continental Free Trade Area (AfCFTA) Agreement, a landmark initiative aimed at creating a single market across Africa, has now marked five years since the official commencement of trading on January 1, 2021. Envisioned as a catalyst for profound economic transformation, the AfCFTA seeks to unite 54 economies, representing 1.4 billion people and a combined Gross Domestic Product exceeding $3.4 trillion. Its overarching objectives include boosting intra-African trade, fostering industrial development, and enhancing the continent's competitiveness on the global stage.

However, as Adesoji Adesugba argues, the ultimate success of this ambitious project will be 'won or lost on the factory floor'. This perspective underscores a critical reality: while the diplomatic achievement of establishing the AfCFTA is undeniable, the real measure of its impact lies in the practical experience of businesses and traders. The challenge is not solely about eliminating tariffs, but fundamentally about reducing the everyday costs and logistical hurdles of moving goods across African borders, thereby stimulating local production and fostering robust regional value chains. This article delves into the AfCFTA's progress and challenges over the past five years, examining its legal framework, operational instruments, and the imperative to translate policy into tangible economic benefits for African manufacturers and consumers.

The journey towards the AfCFTA began with the signing of the Agreement Establishing the African Continental Free Trade Area on March 21, 2018, in Kigali, Rwanda. This agreement, brokered by the African Union, marked a significant step towards fulfilling the long-held vision of an integrated African Economic Community, as outlined in the 1991 Abuja Treaty. The AfCFTA Agreement officially entered into force on May 30, 2019, following the deposit of the 22nd instrument of ratification.

The operational phase of the AfCFTA was subsequently launched on July 7, 2019, in Niamey, Niger, with the activation of five crucial operational instruments: the Rules of Origin, an online negotiating forum, a mechanism for monitoring and eliminating non-tariff barriers, a digital payment system, and the African Trade Observatory. While the agreement became effective in 2019, actual trading under the AfCFTA regime officially commenced on January 1, 2021. The AfCFTA's objectives are comprehensive, aiming to create a liberalised market for goods and services, facilitate the movement of capital and natural persons, promote industrial development through diversification and regional value chain development, and enhance the competitiveness of State Parties within the continent and globally. The Agreement is structured into phases, with Phase I covering Protocols on Trade in Goods, Trade in Services, and Rules and Procedures on the Settlement of Disputes. Phase II negotiations address Investment, Intellectual Property Rights, and Competition Policy, with Digital Trade also added, and Phase III focuses on Women and Youth in Trade.

Five years into the commencement of trading, the AfCFTA has demonstrated significant progress in establishing its foundational legal and institutional frameworks, yet faces considerable hurdles in translating these into widespread economic impact. As of June 2023, a remarkable 87.03% of signatories had deposited their instruments of ratification, indicating strong political commitment. Negotiations on tariff liberalisation have progressed, with member states committing to phase out tariffs on 90% of goods over 5 to 10 years, and on 7% of sensitive goods over 10 to 13 years, leaving only 3% excluded from liberalisation. The operationalisation of the Dispute Settlement Body in April 2021 and the launch of the Pan-African Payment and Settlement System (PAPSS) are critical milestones designed to facilitate smoother trade and provide legal certainty.

However, the core argument that the AfCFTA's success lies on the 'factory floor' highlights persistent challenges. Despite the agreement, intra-African trade still hovers around 15% of the continent's total commerce, significantly lower than other regional blocs. The World Bank has underscored that the most substantial gains from the AfCFTA will come from reducing the everyday costs of moving goods across borders, rather than solely from tariff reductions. This points to the pervasive issue of non-tariff barriers (NTBs), infrastructure deficits, and inconsistent legal and regulatory frameworks across member states, which continue to impede the free flow of goods and services. Business leaders have voiced concerns about the agreement's efficiency, indicating that the practical experience for many traders has not yet significantly changed.

A crucial element for fostering industrialisation and regional value chains is the effective implementation of the Rules of Origin (RoO). These rules are designed to ensure that only products genuinely originating from AfCFTA State Parties benefit from preferential treatment, thereby preventing 'trade deflection' and encouraging local sourcing and manufacturing. While Annex 2 of the Protocol on Trade in Goods provides the framework for RoO, the detailed product-specific rules in Appendix IV have been a subject of ongoing negotiations. Their clarity and consistent application are paramount for businesses to confidently invest in cross-border production and supply chains, enabling the 'Made in Africa' revolution envisioned by the AfCFTA.

The AfCFTA's Dispute Settlement Mechanism (DSM), established under Article 20 of the Agreement and administered by the Protocol on Rules and Procedures on the Settlement of Disputes, provides a framework for resolving disputes between State Parties. Modelled on the WTO's Dispute Settlement Understanding, it comprises a Dispute Settlement Body (DSB), Adjudicating Panels, and an Appellate Body. While operational, its effectiveness is yet to be fully tested, and only State Parties, not individual companies, can initiate claims. The Agreement itself is subject to review every five years after its entry into force, meaning a review was due around May 30, 2024, with the African Union Summit in February 2024 directing the Secretariat to prepare for this process. This review offers a critical opportunity to address the identified gaps and accelerate the practical implementation of the AfCFTA's industrialisation agenda.

The African Continental Free Trade Area, five years after the commencement of trading, represents an unparalleled opportunity for Africa's economic integration and industrial transformation. While significant progress has been made in establishing the necessary legal and institutional architecture, the true test of the AfCFTA's success lies in its ability to foster a conducive environment for manufacturing and trade on the ground. The emphasis on the 'factory floor' and the reduction of non-tariff barriers is a clear directive for policymakers and practitioners alike, highlighting that bureaucratic efficiencies and logistical improvements are as critical as tariff liberalisation.

For legal professionals and businesses operating across Africa, understanding the evolving landscape of the AfCFTA is paramount. This includes navigating the complexities of the Rules of Origin, which dictate preferential treatment, and being aware of the operational Dispute Settlement Mechanism, even if direct access is limited to State Parties. As the AfCFTA undergoes its mandated five-year review, practitioners should closely monitor proposed amendments and new protocols, particularly those related to investment, intellectual property, and digital trade. The future trajectory of the AfCFTA will depend on the sustained political will to address structural impediments, invest in critical infrastructure, and ensure that the grand vision of a unified African market translates into tangible prosperity for its diverse economies and populations.