As one of the flagship projects of the AU, the AfCFTA promises to transform Africa in several ways, laying the foundation for unprecedented levels of economic integration through creation of the world’s largest free trade agreement for goods and services – based on number of members. The AfCFTA is comprehensive and addresses several levers that contribute to a more integrated continent.
There is optimism that the potential impacts of the AfCFTA will be significant. A World Bank study on the economic impacts of the AfCFTA estimates that total African exports would increase by almost 29% by 2035, driven mostly by an expected substantial increase in intra-African trade in African made goods and services.
While the economic and social gains from the AfCFTA will largely stem from reduced barriers to intra-Africa trade, and export-led industrialisation, these developments do not happen in silos. The AfCFTA is comprehensive and ambitious, and its disciplines cover trade in goods and services, investment, competition policy, dispute settlement, women and youth in trade, digital trade, and many related disciplines. Although its full implementation is delayed, significant progress has been made. This report provides an update on several of these developments.
Trade in services plays a crucial role in economic growth and regional integration: as an economic activity in its own right (e.g. the provision of cross-border telecommunication services, consulting services); as complementary to trade in goods (e.g. financial and legal services, intellectual property as an input on the manufacture of goods); and is directly linked to the movement of people (e.g. professionals, truck drivers moving goods across borders, students obtaining education services in another country, engineers working on an infrastructure project abroad).
The AfCFTA Protocol on Trade in Services entered into force on 30 May 2019 and seeks to create a single market for trade in services through the progressive liberalisation of services in a range of sectors commencing with five priority ones: business, communications, financial, tourism, and transport services. In each of these sectors, state parties are exchanging schedules of specific commitments, and working on regulatory cooperation towards reform of domestic regulation to facilitate open markets.
Commitments are made in four “services modes” of supply (Modes 1–4), where Mode 1 covers the provision of a service from one country to another (cross-border supply). Mode 2 relates to the consumption of services abroad in the territory of another country (for example, tourism, education, or when seeking medical treatment). Mode 3 relates to the provision of services abroad, through the establishment of commercial presence in the territory of another country. Finally, Mode 4 commitments relate to the (temporary) movement of persons to another country to provide a service, for example in the fields of engineering, education, technology, medical, or the supply of other consulting services.
It is anticipated that in each of the five priority sectors, AfCFTA state parties will offer access for movement of persons under Mode 4.
The GTI is an initiative championed by the AfCFTA Secretariat to begin trade under the Agreement. While the GTI is not explicitly provided for in the AfCFTA, its legal basis was adopted by the AfCFTA Council of Ministers, whose mandate includes taking measures to ensure implementation of the Agreement. The GTI involves trade between countries that have joined the initiative, in products for which any tariff treatment and rules of origin (RoO) have been finalised. It is a unique initiative to test the broader institutional and operational environment of the AfCFTA while facilitating the start of commercially meaningful trade under the arrangement. The GTI signals to traders and governments that Africa is ready to embrace these new trade opportunities.
The GTI initially comprised eight countries (Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia), while Algeria joined later, and 96 products (including horticulture products, pharmaceuticals, rubber, coffee and tea, and others) to be traded preferentially under the AfCFTA. This requires administrative and regulatory readiness by the participating countries, and alignment with the provisions of the AfCFTA.
Early transactions, including agrifood products from Tunisia to Cameroon, Kenyan batteries to Ghana, or Rwandan coffee to Ghana, were guided through the trade process and assisted with customs procedures at the port of export and import.
South Africa joined the initiative in January 2024 with shipments of home appliances and mining equipment to Ghana and Kenya, marking an important milestone and enabling possibilities for new trade between participating countries in South, East, West and North Africa. Under a Phase II of the GTI, announced by the AfCFTA Secretariat, more than 30 state parties expressed interest to join and at the Biashara Afrika Forum of October 2024 held in Kigali, Rwanda, a showcase of interest was expressed in agriculture and agribusiness, pharmaceuticals, automotive, transport and logistics, and digital technologies. The GTI currently has representation from all regions in Africa, including Island States.
The GTI is a commendable initiative and important catalyst to help drive progress in the AfCFTA, yet it must ultimately be seen as a bridging facility to enable preferential trade between countries that have completed critical aspects of the trade negotiations, and in turn, to finalise national legal processes to implement these outcomes.
From the perspective of movement of people, the GTI can be leveraged as a case for acceleration of movement of persons for the purposes of intra-African trade – including but not limited to trade in services. This is essential because people must follow both the goods and services. Building on the GTI momentum, it is important to work towards visa-free movement for AfCFTA-related business.
The PFMP was adopted by AU Member States in 2018, and contains several migration mobility provisions, aimed at progressively freeing the movement of persons across African borders, and extending this to the right to enter, reside and establish in other African countries. However, it remains a different undertaking from the AfCFTA. To date, 33 member states have signed the Protocol, yet notwithstanding the positive momentum towards a more integrated continent, only 4 countries have ratified it (15 are needed for the Protocol to enter into force). The last ratification was in July 2019 (Niger).
The first phase of implementation would involve visa-free travel, with more progressive rights to follow. Despite the relatively high initial endorsement of the PFMP, the lack of progress suggests deep-rooted concerns about the scale and scope of the Protocol, perhaps a concern about the depth and pace of commitments it requires, and fears about a loss of policy autonomy. Notwithstanding the largely unchanged status quo, efforts to ease the movement of persons – often within the regional context – remain positive precursors to creating a broader platform for human mobility across AU member states.
The Single African Air Transport Market (SAATM) is an initiative to significantly expand intra-African air connectivity through a range of measures, including deregulation and increased transnational competition. The SAATM initiative considers enhanced traffic rights for eligible airlines, improved connectivity schedules and common standards on issues such as safety and security, consumer protection and competition, as important building blocks towards a fully liberalised African air transport market.
One of the pillars considered for further liberalisation extends to creating more opportunities for airlines to operate flights that drop off and collect passengers in third countries. New routes and improved frequencies would offer travellers wider choices, encourage lower fares, and help grow air travel to facilitate tourism, trade in goods and services, economic opportunity and investment.
As one of the AU’s flagship projects under Agenda 2063, the SAATM was officially launched in 2018 at a Summit of the AU Assembly of Heads of State and Government. Thirty-seven countries, representing more than 80% of Africa’s aviation market, have signed up to the SAATM. However, in order for the initiative to deliver on its objectives and to significantly advance intra-African connectivity, it requires the political will to be fully operationalised.
An AfCFTA Protocol on Women and Youth in Trade was finalised earlier in 2024. It aims to promote and attain “sustainable and inclusive socio-economic development, equality for women and youth”. In many ways, this is groundbreaking, moving beyond gender equality and inclusivity as a general objective, to having provisions with concrete obligations to empower women and youth in trade.
The Protocol requires countries to pay particular attention to women and youth engaged in intra-African trade, including support for access to trade related infrastructure. This would include improvements to border infrastructure, to ease cross-border customs processes, and related trade facilitation issues.
The Protocol contains several specific and targeted provisions aimed at assisting women and youth to enhance their participation in cross-border trade. For example, easing non-tariff barriers, measures to improve access to finance, training to improve compliance with regulatory requirements and standards, by focusing on those aspects specifically affecting this target group. These are commendable goals.
Where the Protocol is limited on specific implementation modalities, given that it defers to and operates within the confines of the applicable national laws, the AU recently published a draft ministerial regulation on preferential market access for women and youth in trade, as required by the Protocol in Article 4(4). This details several actions specific to overcoming the challenges faced by women, youth and small-medium enterprises that are engaged in cross-border trade, thereby supporting implementation of the Protocol. Explicit objectives include promoting border transparency through dedicated trade information offices, cooperation on gender-sensitive infrastructure development (including safe storage of goods, and gender sensitive sanitary facilities), capacity building initiatives and generally addressing trade and border-related disparities and barriers that impede the participation of women and youth in the regional trade market.
The AU regulation also introduces a trade promoting regime (TPR) for small scale traders, highlighting how initiatives to facilitate cross-border trade also depend on the ease with which citizens of African countries can travel across borders unburdened by excessive bureaucracy.
It will be crucial that this Protocol is complemented by a facilitated regime for women and youth to move visa-free across the continent to seize AfCFTA-related opportunities.
The TPR envisaged by the regulation on preferential market access for women and youth in trade aims to significantly reduce restrictions on low-value cross-border trade and is “developed to facilitate a preferential market for women and youth trading under the AfCFTA” (Draft Ministerial Regulation on Preferential Market Access for Women and Youth in Trade, Aug 2024).
Details must still be finalised and aligned with the general AfCFTA RoO regime (and offer tangible enhancements over the simplified customs measures envisaged there), however the TPR intends to ease trade in eligible product categories typically traded among adjacent border communities, reducing or even doing away with some of the administrative responsibilities usually applicable to such trade.
14 World Bank (2020). The African Continental Free Trade Area – Economic and Distributional Effects. Available at: openknowledge.worldbank.org 15 For a discussion on the legal basis of Directive 1/2021 and the GTI, see: tralac.org 16 Protocol to the Agreement establishing the African Continental Free Trade Area on Women and Youth in Trade. Article 2. Available at: tralac.org
