By clubbing together, African countries acknowledge how hard it is to go it alone in a turbulent global economyby Guy de Jonquières / April 10, 2019 / Leave a comment
As President Donald Trump takes an axe to traditional US trade relationships and Britain prepares to exit the world’s biggest free trade area, Africa is moving smartly in the opposite direction. This month, Gambia became the 22nd country to ratify the Africa Continental Free Trade Area agreement, bringing into being a grouping intended eventually to create a single market encompassing 55 nations and 1.2bn people with a combined gross domestic product of $3trn.
The formation of AfCFTA is a bold vote of confidence in the value of international economic integration at a time when trade conflicts around the world are multiplying, trade barriers are rising and the future of the World Trade Organisation is under threat. It is all the more striking because African countries have often remained on the sidelines of global trade liberalisation initiatives in the past.
AfCFTA commits members to eliminating tariffs on 90 per cent of goods imports, opening up trade in services and tackling a wide range of non-tariff barriers to trade. The United Nations Economic Commission for Africa estimates that, if fully implemented, it will increase regional trade by more than 50 per cent. Further gains could be made from separate plans to free up movement of persons, residence rights and air transport competition.
Much remains to be done to achieve that goal. More than 30 countries have yet to commit themselves fully to AfCFTA and Nigeria, Africa’s biggest economy is still balking at doing so. Governments must brave inevitable domestic resistance to cutting trade protection, particularly non-tariff barriers, and invest in infrastructure and adopt policies needed to boost trade. And wide differences in levels of economic development between AfCFTA’s members mean the grouping may struggle to move much faster than the slowest among them.
However, two factors are spurring the project on. One is the contribution of economic integration to the—albeit uneven—recovery in African growth so far this century. Aided by a patchwork of smaller regional trade arrangements, intra-African exports rose from 10 per cent of the region’s total exports in 2010 to 17 per cent in 2017. That is still low by European and US standards but suggests that further integration offers plenty more gains to be…