ZLEC, or AfCFTA, the largest free trade agreement on a planetary scale, officially kicked off in Africa on 1.1.21. Great opportunities and just as many challenges lie ahead in an area populated by 1.2 billion people, whose economy is now worth $2.5 trillion (1.2).
ZLEC, or AfCFTA. The largest free trade agreement
The ZLEC agreement-orZLECAf (Zone de Libre-Échange Continentale Africaine) or #AfCFTA(African Continental Free Trade Agreemen)-establishes the largest single market for goods and services at the planetary level. It is joined by 54 of the 55 African states, with only Eritrea temporarily excluded.
‘This is a historic agreement because it begins a new chapter in the history of African unity’ (Paul Kagame, president of Rwanda).
The goal is to promote and guide Africa’s development and economic growth. With a view to breaking down internal barriers between individual countries and thus propelling the African continent toward a leading role in the global economy. (1,2)
ZLEC, great opportunities
International observers see enormous potential in this agreement:
– by 2030 consumption (B2B and B2C) is estimated to reach US$6.7 trillion, offering great opportunities for international investors in Africa, (3)
– by 2035 total income could increase by US$ 450 billion/year (+7%), with higher wage growth for women (+10.5% vs 9.9% for men). With the possible relief of some 30 million people from extreme poverty. (4)
The removal of customs duties could bring some small, hitherto isolated economies into a common economic space. The development of various industries is also envisioned. The most optimistic hope for the formation of an economic bloc that can compete globally with other major economies. With more realism, more self-sufficiency can be expected.
Obstacles
The initial context is difficult. Member states still need to agree on the details of tariff concessions and non-tariff barriers, rules of origin, timetable for liberalization of services. 26 signatory countries have yet to ratify the agreement, and some governments seem to be underestimating the need to update their legal systems in view of the opportunities that may arise from its implementation.
Intra-African trade now accounts for only 16 percent of the total, with duty regimes often higher than those looming over imports to other continents. Road and rail transportation networks are very inefficient, and industrialization-in the second-largest continent by population after Asia-still lags far behind, contributing only 1.4 percent to world manufacturing added value (Q1 2020 data, UNIDO).
The crisis generated by Covid-19 caused, among other things, the first economic recession in 25 years in sub-Saharan Africa (-3.3%, 2020).
ZLEC, the grand challenges. Multiculturalism and infrastructure
The African Union(AU) therefore faces a number of challenges. First and foremost, engaging social stakeholders and citizenships so that socio-cultural integration can be fostered that precedes and accompanies economic integration:
1) multiculturalism. The African continent expresses a perhaps unique variety of cultures and languages, ethnicities and religions, economic and political systems. To be understood as resources rather than causes of conflict. (5) Were it not, we would add, for the controversial influences of colonial powers,
2) infrastructure. International partners must be encouraged to invest in local and national infrastructure projects, including through the input of entities already operating on the ground such as theAfrica Investment Forum, theAfrochampions Initiative and the Africa Infrastructure Development Program. Only then can economic, demographic and productive growth be channeled efficiently and assets allocated without excessive waste and loss. (6,7,8).
ZLEC, the grand challenges. Fair development and social justice
The indiscriminate opening of national markets may exacerbate economic disparities that already exist. Therefore, recourse should be made, according to some economists such as Landry Signé, to the Special and Differential Treatment (SDT) Provisions under ZLEC – AfCFTA, for the protection of LDCs, along with assistance programs.
Member states and institutions-in fostering the development of a business environment that helps improve the productivity and skills of businesses and workers-should increase public investment to extend social protection coverage, improve education and health services. To ensure that wealth is inclusive and reinvested in communities, starting with youth and women. (8)
‘A marathon always begins with a step, but it is always impossible until it is completed’ (Nelson Mandela)
Dario Dongo and Elena Bosani
Notes
(1) Dario Dongo. ZLEC, the Schengen of Africa. GIFT (Great Italian Food Trade). 8/27/18, https://www.greatitalianfoodtrade.it/mercati/zlec-la-schengen-d-africa
(2) Dario Dongo. ZLEC, the African Economic Union at take-off. GIFT (Great Italian Food Trade). 27.8.19,
https://www.greatitalianfoodtrade.it/mercati/zlec-l-unione-economica-africana-al-decollo
(3) Angelle B. Kwemo. The AfCFTA: The first step of a long marathon. Brookings Institution. 3.9.19, https://www.brookings.edu/blog/africa-in-focus/2019/09/03/the-afcfta-the-first-step-of-a-long-marathon/
(4) World Bank. Trade Pact Could Boost Africa’s Income by $450 Billion, Study Finds. 7/29/20, https://www.worldbank.org/en/news/press-release/2020/07/27/african-continental-free-trade-area
(5) Africa Investment Forum https://www.africainvestmentforum.com/
(6)Union Africaine https://au.int/fr/node/34022
(7) PIDA, Programme for Infrastructure Development in Africa https://www.au-pida.org/
(8) Landry Signé and Colette van der Ven (2019). Keys to success for the AfCFTA negotiations. Brookings Institution
https://www.brookings.edu/wp-content/uploads/2019/05/Keys_to_success_for_AfCFTA.pdf
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Lawyer in Milan and Frankfurt am Main. An expert in family, juvenile and criminal law, she is now enrolled in a university master's programme in food law
