An analysis of the prospective benefits and challenges of the African Continental Free Trade Area (AfCFTA) to economic development in Africa.

Abstract

This study sought to analyse the prospective benefits and challenges of the African Continental Free Trade Area (AfCFTA) to the economic development of Africa guided by the complex interdependence and realism theories. The main objectives of (AfCFTA) is to strengthen intra-African trade by abolishing trade barriers as well as promoting a single market for goods and services through the free movement protocol across Africa. Free trade agreements over the years have been viewed with mixed sentiments for their role in economic development. The main aim of free trade is to lower tariffs and encourage trade between countries that would have signed the agreement. Free trade agreements bring about employment opportunities as industries expand, competition and efficiency in production methods, which contributes to economic development. In Africa free trade agreements have been spearheaded by Regional Economic Communities (RECs) such as Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC) to promote deeper economic integration, which triggered the launch of the African Continental Free Trade Area (AfCFTA). This research was conducted in two distinct parts of in-depth interviews with different stakeholders and analysis of documents to gather data about AfCFTA. Key findings were that AfCFTA has the potential to advance economic development from the huge market of Africa comprising of 1, 2 billion people including the diverse natural resources. The findings also revealed that enhancement of the free movement of people and services could improve intra-African trade, which has been extremely low due to trade barriers. The study concluded that the African Continental Free Trade Area is important to the African Union as a way to foster deeper economic integration. Elimination of tariffs and other trade impediments coupled with free movement of people and business, is anticipated to increase intra African trade. Despite the potential to boost intra-African trade, the research found out that free trade agreements require commitment to achieve its objectives. The findings indicated that overlapping memberships to current trade agreements, lack of political will, heterogeneous customs systems as well as poor industrial and agricultural practices are the main challenges affecting economic integration efforts in Africa. The main recommendations from the study included that there is need for Africa to invest in industry to be able to sustain open markets as well as open borders and ultimately realise benefits such as employment creation and economic growth. There is need to improve good governance and fight corruption through independent institutions in order to gain credibility. There is also need to manage conflicts and increase stability. Lastly, investments on value addition and infrastructure need to prioritised to promote trade of the finished products instead of exporting raw materials.