The Significance of African Continental Free Trade Area (AfCFTA) in the Attainment of SDGs

Introduction

At the establishment of the United Nations Conference on Trade and Development (UNCTAD) in 1964, the international community recognized that: “Economic and social progress throughout the world depends in large measure on a steady expansion in international trade.” (UNCTAD, 1964). This affirms the importance of international trade as a means for achieving socio-economic development

Indeed, international trade and sustainable development are recurrent themes in global discussions, with trade policy makers seeking to draw linkages between the two and to outline ways a liberalized trading field can contribute to the achievement of the Sustainable Development Goals (SDGs) – the 17 global goals set by the United Nations General Assembly in 2015 to be achieved in the year 2030.

Subsequently, the World Trade Organisation (WTO) is implementing a number of measures towards the rapid liberalization of trade with the aim of positioning the sector as a key contributor to sustainable development. This includes the call for the formation of Regional Trade Agreements (RTA’s) – formal agreements to facilitate the smooth exchange of goods and services between two or more countries. They serve as treaties between two or more countries to grant favourable treatment to goods and services from emerging countries that are signatories than trade from outside the region.

The signing in March 2018 of the African Continental Free Trade Area (AfCFTA) is a big leap in towards this end. Endorsed by 44 African head of states, AfCFTA isa framework to establish a single continental market for goods and services with free movement of capital and business travelers. AfCFTA presents a chance to defragment the African market, thus enhancing competitiveness and serving as a vehicle to support the achievement of the SDGs

Significance

AfCTA presents an opportunity to usher in an industry export base era and improve upon the outcomes of the Preferential Trade Agreements (PTA’s). The AfCFTA eliminates 90% of tariffs and allows free movement of labour, thus, encouraging industrialization, more sustainable in the long term as compared to the colonial form of industry which dwells on extractives (Fofack, 2018).

Extractive exports have a low labour requirement hence the lack of jobs in many African countries. With Africa’s increasing youthful population, shifting to a more industrial economy fueled by inter-regional trade will have considerable benefits, notably in terms of job creation and improved socio-economic conditions. This will in turn impact SDGs 1, 8 and 9 which seek to end poverty, induce economic growth and promote industry and innovation.

Currently intra traders and cross border traders – mostly comprising women – are subject to abuse and harassment at the borders. Thankfully, AfCFTA offers a system for women to formalise their trade, guaranteeing them greater protection and profits. This directly addresses SDG 5, which speaks to the important subject of gender equality.

There are many job opportunities for women in export oriented businesses where income levels are higher and jobs more stable due to the inter-dependency of global value chains. These opportunities directly affect Goal 10 of reducing inequalities.

AfCFTA will establish a common custom union with common standards to be applied throughout the entire free trade area. This will enhance the standardization and quality of products to be sold across the region, ensuring value for money for customers. Also, it will promote healthy competition.

Improved food security is yet another key benefit of AfCFTA. Africa has 60% of the world’s arable land; an increase in trade especially amongst countries will encourage a shift from peasant forms of farming to intensive commercial farming thus boosting food production. This addresses SDG 2 which seeks to end hunger everywhere around the world.

Conclusion

Effective implementation of AfCFTA portends several positive outcomes for the region, however the agreement is not without challenges as far as its ability to support the SDGs is concerned. For example, data from the UNCTAD has shown that there are mixed impacts on women where trade liberalization is concerned. Women may get stable wage employment but may receive low salaries and limited opportunities (UNCTAD, 2014).

Liberalisation of trade also tends to increase the ecological footprint of industries. The destruction of water bodies and reserve sites is exacerbated. Recently, farming activities in and around the Amazon rainforest led to bushfires, compromising this important ecosystem.

The governments of individual countries therefore have a responsibility to consciously implement measures that will complement this shift in trade with the objective of achieving a coherence between improved international trade and the sustainable development framework and policies. So the big question is, how are African governments taking advantage of multilateral trade policies and frameworks to achieve sustainable development?

Disclaimer: Opinions expressed in the article are that of the author and do not represent the views of the organization.

Author:

Michael Abrokwaa is a Programme Officer at the Africa Centre for International Trade and Development (ACINTaD).

References

1. Cernat, l. (2011). Slashing “Killer Tarrifs”: An easy step towards greater trade and development policy coherence in Africa. CPR, 36.
2. Fofack, H. (2018). Forthcoming. “Leveraging the African Private Sector to Enhance the Development Impact of the African Continental Free Trade Area Agreement. World Economics Journal, 56.
3. UNCTAD. (1964). Final Act and Report. Trade and Development. Geneva : UNCTAD