1.2 billion inhabitants, well over US$2.1 billion in GDP, 55 countries, one people; that is the story of Africa; the kind of stories that make the continent too attractive to ignore!
Although the continent has had its fair share of many inter-tribal wars and communal strife (like every other part of the world has also experienced), there is more to this natural resources-rich continent than the conflicts regularly shown on television.
Since the Nigerian president, Muhammadu Buhari, penned his signature on the African Continental Free Trade Agreement (AfCFTA) document, on the 7th of July 2019, watchers of the political and economic space have continued to project positive sentiments for the continent.
Even though plagued with diverse disharmony and disagreements here and there, the recent xenophobic attacks on foreigners in South Africa certainly does not represent who Africans are.
Instead, it is the unequivocal and loud condemnation of such criminal acts reverberating across the continent that describes how united the people can be.
African governments have, by coming together to sign the AfCFTA, proven to the world that they are ready for business – for cross-border trade with one another and the outside world.
The AfCFTA is the result of many years of intergovernmental and regional negotiations and intense discussions guided by the Lagos Plan of 1980 and the Abuja treaty of 1991. Also instrumental to this success are the African Union summit decision of 2012 to establish a continent-wide free trade area and the 2015 declaration to achieve the “Africa we want” by 2063.
The world is watching; little wonder the BRIC bloc invited South Africa to join the union in 2010, a strategy that further opens up the continent for more trade and collaboration opportunities.
The AfCFTA is, after the World Trade Organisation, the world’s most far-reaching free trade area and that means business on the continent will never remain the same again.
The AfCFTA opens up Africa for more investments
For instance, the agreement aims to remove as much as 90% (targeting 100%) of tariffs for goods shipped from one corner of Africa to the other. One significant implication of this idea speaks to the ease of doing business. In other words, African products will be cheaper and easily accessible across board irrespective of where it is manufactured.
Similar to the above, imports from outside the continent, say China, for instance, can be routed to specific ports like the one in Djibouti to serve the eastern coast of the continent or to Lagos to serve the west, Durban to serve southern Africa businesses, and so on.
With excise duties eliminated or reduced for most products across the continent, goods can move freely and unhindered to and from every country. As the continent opens its doors to receive foreign goods, so will it rely on the same channels to transport raw materials and finished products to the closest ports for onward exportation.
The good times are here!
In a similar vein, Africa can become the world’s favourite hub for low-cost manufacturing. This opportunity is already being exploited by the Chinese considering its massive investments in the continent’s infrastructure.
Through its Belt and Road initiative, China has pumped billions of Yuan into constructing seaports, standard gauge rail, telecommunication facilities, bridges, dams, and electricity-generating plants, among others, across African plains, desert, forests, and seas.
This move, when tied to the AfCFTA, is a powerful strategy to open up the continent and transform it into a manufacturing hub.
This widely anticipated transformation is good news for Africa and its army of unemployed young men and women considering the example of how the Asian Tigers became global competitors in the manufacturing and commercial space.
While Hong Kong and Singapore are major financial centres in the global scheme of things, South Korea and Taiwan have become high-income societies where manufacturing and exportation earn them lots of revenue.
The South-East Asian countries of Indonesia, The Philippines, and Vietnam have also significantly benefitted from China’s “outsourcing economic model.” Billions of Yuan and technical expertise have flowed to these countries from China over the years, helping grow their manufacturing base and simultaneously reducing unemployment.
With this latter group of countries nearing full capacity and gradually becoming middle-income societies, China is beginning to focus its foreign economic policies towards Africa, and the AfCFTA is going to be the vehicle to drive that initiative – as is being witnessed already.
With a 100% liberalised tariff regime, more people will be employed – especially in the energy, transportation, telecommunications, agriculture, and manufacturing sector. It explains why China is interested in these critical sectors and seriously investing time and resources in developing them across Africa.
Related: Is China Africa’s newfound friend?
AfCFTA: An essential tool for better trade negotiations
So far, the pattern is clear; China hopes to support the development of infrastructure that will help local industries add value to raw materials before exportation. This aspect is significant because it will also improve the skills of the labour force, lifting even more people out of poverty.
Said otherwise, the AfCFTA’s drive to bring the continent’s businesses into one single trade agreement aligns perfectly with China’s foreign policy concerning Africa.
Instead of dealing with multiple countries and scouring through dozens of trade documents, China can have a similar mutually beneficial trade policy with every country in the continent. This simplicity will drastically reduce negotiation time, provide a level playing field for all partners, and bring African businesses into the big leagues.
It’s a win-win for all parties involved!
Foremost African liberation advocates like Kwame Nkrumah, Jomo Kenyatta, Nnamdi Azikiwe, and Nelson Mandela, among many others, will be happy in their grave today, knowing that their Pan-African dreams and aspirations are coming to pass after all.
If there is anything to learn from China, it is the lesson of unity!
The unity of the African people is crucial to its development, and that echoes through all the speeches and demonstrations condemning the xenophobic attacks of September 2019.
The AfCFTA is as symbolic as it is timely and necessary; it signifies a moment in history when Africans choose to relegate tribal interests and differences to the background and instead choose continent-wide solidarity.