Working for a freer future

While we have seen plenty of political commitment to creating an African free trade area, implementation will have to go beyond political and diplomatic commitment to truly benefit the continent, says business law expert Brenda Mutale Chanda.

The African Continental Free Trade Area (AfCFTA) was established by an agreement that has now been signed by 54 African nations to create the world’s largest free trade area.

“If properly implemented, AfCFTA has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures,” said Chanda. “We anticipate that with proper training and sensitisation on the benefits of trading under the agreement, many businesses will take advantage of the opportunity.”

Chanda notes that after AfCFTA came into force in May 2019, trading under the agreement was expected to begin in July 2020, but it was delayed until 1 January 2021 due to Covid-19.

“Obviously a lot of things have been overshadowed by Covid and governments have had to redirect a lot of resources and attention to bring the pandemic under control,” commented Chanda. There is some irony in having an agreement designed to make movement of goods, services, and people much freer coming into force during a time when a global pandemic massively constrained such movement.

“Delays have happened at borders for goods in transit because of the Covid protocols that have been put in place,” Chanda added. “Of course, in terms of movement of people, which is one of the key elements of AfCFTA, we haven’t seen much of that either.”

But even in such a constrained environment, some strides have been made.

“Zambia’s implementation ranking is quite impressive – over 60%, based on what they call ‘country preparedness’. This includes ratification of the agreement, putting in the necessary infrastructure for trade, and participating in the negotiations relating to the various protocols.”

In August, Zambia’s international airport was launched, and another airport has opened in Ndola, in the Copperbelt Province. Zambia has also partnered with Botswana to commission the Kazungula Bridge Project to facilitate free trade movement across the Zambezi River and improve regional integration.

Chanda believes AfCFTA will provide great opportunities for investors to partner with African governments in the development of key infrastructure using the public-private partnership (PPP) model. “We also see opportunities for clients who are lenders to finance infrastructure projects. Our clients can take advantage of the huge infrastructure financing gap that most countries on the continent have, and deploy resources and expertise in project structuring, development and implementation.”

As an example, the World Bank estimates that AfCFTA could boost the continent’s income by up to US$450 billion if coastal African states increase the efficiency, capacity, and safety measures of their maritime transport systems. The development of port infrastructure in most African countries is currently behind the rest of the world. There are also gaps and opportunities with energy and telecommunications infrastructure.

For AfCFTA to succeed, nations will need to buy into the agreement and put in place necessary policies to make their country attractive for investment, said Chanda.

“You can have so many technical papers, but what is important is that financing of projects which will facilitate the movement of goods and services is put in place. Otherwise, it will just remain an agreement on paper.”

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