ZLEC, Zone de libre-échange continentale. The largest free trade agreement after theWorld Trade Organization (WTO) by territorial extent, covering the entire African continent, is finally ready to take off. After Nigeria and Benin joined, 7.7.19 in Niamey, Niger. Brief news items to follow.
ZLEC, the African Economic Union
In just 3 years since negotiations began, at the 25th regular session of theAfrican Union(AU) — in Johannesburg, South Africa, on 14-15.6.15 — the pan-African agreement was finalized. And it went into effect, on 3/23/18, as a result of the 10th AU extraordinary meeting, in Kigali, Rwanda. With Nigeria and Benin joining-at the 12th Extraordinary Meeting of AU Heads of State and Governments on 7.7.19 in Niamey, Niger. 54 out of 55 countries have joined the agreement, 27 have already ratified it. It awaits Eritrea, which only on 8.7.18, after 30 years of conflict, finally reached a peace agreement with Ethiopia.
The Free Trade Agreement (ZLECAf, Accord portant création d’un Zone de Libre-Échange Continentale Africaine, or AfCFTA, African Continental Free Trade Agreement), as noted, aspires to boost the African economy through the liberalization of intra- and inter-continental trade. The gradual reduction of customs barriers–tariff and non-tariff, on 90 percent of goods–must be completed in the 10 years after its entry into force, by 3/23/28. Member states will only be able to exclude, at most, 3 percent of the commodity categories. As well as deciding to identify sensitive products, no more than 7 percent, to be liberalized over a longer time frame.
ZLEC, the outlook for the African continent.
The ‘African Schengen,’ when completed, will realize the most territorially extensive free trade area on a planetary level. For the benefit, hopefully, of more than 1.2 billion people. With a forecast of a substantial increase in trade between African countries (+52.3% by 2022, compared with a current as modest 17% of the total), as well as between them and the rest of the world (+2.8% over the same period).
Nigeria’s entry radically innovates the scenario and outlook. Since it is the leading economy and also the most populous country on the continent. With a population of 200 million, which is expected to increase to the point where it will rank third globally, after China and India, in 2050. Nigeria’s re-elected president, Muhammadu Buhari, had so far justified his resistance with the need to safeguard local businesses.
Moreover, Nigeria itself will most likely be one of the biggest beneficiaries of ZLEC. With a GDP of US$450 billion, (a little less than a quarter of Italy’s US$2,084 billion), that is equal to 17 percent of the entire continent. This is followed by Egypt (US$332 billion) and South Africa (US$295 billion).
ZLEC, operational phase
The operational phase of the ZLEC agreement was deliberated on 7.7.19 in Niamey. According to the defined timetable, by 1.2.20 member states are to submit the list of tariff concessions and ‘rules of origin‘ to the African Union Conference. And by 1.7.20 the dismantling of the tariff system must be started.
The Conference of State Representatives emphasized efforts to strengthen the manufacturing industry, especially in the agribusiness sector, the construction of suitable infrastructure and the need to implement the Protocol to Ensure the Free Movement of Persons, drafted together with the ZLEC Agreement.
Challenges and critical issues
Industries and infrastructure are the areas where investment should be focused. The market on the African continent appears to be poorly differentiated, to the extent that African countries tend to import most finished products from other continents, often facilitated by advantageous tariffs that nonetheless hinder the competitiveness of local production chains. For this same reason, exports are almost exclusively about raw materials.
Therefore, the growth of the continent’s economy cannot be separated from the development of various industries, including technology. Only then can effective synergy and complementarity amongAfrican Union member countries be realized. Communications networks should also be strengthened, bureaucratic procedures currently governing trade simplified, and technical regulations and trade standards harmonized. And address the endemic neo-colonial corruption that still characterizes political and economic systems.
Combating inequality unfortunately escapes the priorities of the African Union. As indeed to the G7 countries, where social injustice is also worsening. Neoliberal policies inspired by crony capitalism undermine democracies and economic systems, as well as the dignity of individuals. And this will also have to be taken care of by African states, taking into account that the reduction in tariffs also will result in tax revenue losses of $4.1 billion. To the presumable detriment of the most fragile economies.
ZLEC, EU support and prospects for Italy
The European Union is a major supporter of the African integration process. Through contributions from the European Investment Bank (EIB), European Development Fund (2014-2020) and the EU-Africa Trust Fund for Infrastructure and Development Programs of the Economic Partnership Agreement. Then in September 2018, European Commission President Jean Claude Juncker launched theAfrica-Europe Alliance for Sustainable Investment and Jobs. An action plan aimed at increasing trade relations, stimulating investment and creating job opportunities in Africa.
50 million euros have already been allocated by the EU, for the 2018-2020 biennium, to support CFTA. In December 2018, an agreement was signed with UNECA, providing an initial €3 million in funding, to develop strategies for implementing the agreement. In February 2019, €4 million was allocated by the EU for the establishment of an Observatory on Trade in the African Union under thePan-African Program (PANAF).
Italy can in turn benefit from the ZLEC agreement. Already, Nigeria is our second largest trading partner, after South Africa, in sub-Saharan Africa. To date, trade involves the import of raw materials (oil and gas primarily) and the construction of infrastructure (electricity production and distribution primarily). But surely new opportunities may open up for Made in Italy, even in the food sphere hitherto garrisoned in each country by the respective (former) colonial powers.
Italian agribusiness has not yet achieved a major presence among supermarket shelves, unlike the home-furnishing sector that is already highly sought after in Nigeria especially. Nevertheless, the growth of the economy will also be accompanied by the search for Made in Italy food and beverages. And even before that, that of machinery for the food industry in which the Bel Paese excels.
Dario Dongo and Marina De Nobili
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Graduated in law in Trento, she follows a master's degree in food law at Roma Tre. She is passionate about food and wine, she is between culture and tradition.
