Implementation of African free-trade agreement is another virus victim

The commencement of the long-awaited Africa Free-Trade Agreement planned for 1 July has become another victim of the coronavirus, with the announcement that the disruption caused by the virus makes it impractical.

“The Covid-19 situation has caused a major disruption. Governments are now engaged in a fight against the pandemic,” said Wamkele Mene, secretary-general of the African Continental Free Trade Area. There has been no confirmation of a likely new date for implementation.

Intention is to promote easier Africa-wide trade and investment

A free-trade agreement has long been a dream of many African politicians and businesspeople. The intention is to reduce or eliminate cross-border tariffs on most goods, ease the movement of capital and people, promote investment within Africa, and ultimately pave the way for a continent-wide customs union.

This would make Africa the world’s largest free-trade zone with a GDP of around US$2.5-trillion and a market of 1.2-billion people.

Legally the agreement is already operable. But for the July deadline to have effect there were a number of details which needed to be in place as part of phase one of the process.

The African Union was scheduled to have an extraordinary summit in Johannesburg next month to finalise all these elements. But, given the restrictions and travel bans still in place, this would likely have proved impossible.

African business leaders see many positives in an agreement

Last year PwC said African CEOs were positive about the long-awaited African Continental Free Trade Agreement and its potential to grow regional economies.

“Personally, I believe [it is] something that is long overdue,” the head of PwC Africa, Dion Shango, stated at the time. “One of the sad aspects of African trade today is that we are hell-bent on trading with everyone else except with ourselves. Arguably, all African countries have larger trading partners with countries outside Africa than with fellow African states.”

“The sky’s the limit for what can be achieved, and the growth that can be seen coming from out of the continent,” he said.

Major international companies have often been cautious about expanding within Africa due to limited growth, bureaucracy, trading conflicts and protectionism.