The 36th AU Summit AfCFTA: How AfCFTA Will Boost Intra-African Trade, Create Jobs, and Foster Innovation

The African Union (AU) is a continental organization that aims to promote integration, peace, and development in Africa. Once a year, the African Union convenes a powerful gathering: the AU Summit. Moreover, Heads of state and government from across the continent descend upon this crucial meeting, joined by other key stakeholders. Together, they tackle critical issues facing Africa, engaging in vibrant discussions and shaping the continent’s future. Markedly, the African Union (AU) convened the 36th Ordinary Session of the Assembly on February 18-19, 2023, in Addis Ababa, Ethiopia. The theme of the summit resonated across the continent: “Acceleration of African Continental Free Trade Area Implementation.” In fact, this powerful theme underscores the AfCFTA’s significance as a cornerstone of the African Union’s Agenda 2063.

The African Continental Free Trade Area (AfCFTA) is a groundbreaking trade agreement. Furthermore, It aims to create a single market for goods and services across all 55 member states of the African Union. Moreover, this ambitious goal includes establishing a customs union, eliminating trade barriers, and boosting intra-African trade. In March 2018, a landmark moment occurred in Kigali, Rwanda. 44 countries actively signed the AfCFTA agreement eventually. This historic event paved the way for the agreement’s entry into force in May 2019. 22 countries’ ratifications made it official.

Roadmap and action plan

The 36th AU Summit zeroed in on the African Continental Free Trade Area (AfCFTA). Reviewing progress and challenges in AfCFTA implementation was a top priority. The summit also adopted a roadmap and action plan for operationalizing the agreement.

The summit tackled a diverse agenda, ranging from the Union’s internal reform to crucial issues on global stage. Institutional reform of the AU itself was a key topic of discussion. Peace and security in Africa, a constant concern, received significant attention. The global food crisis, a pressing issue impacting millions, was also addressed. The AU’s response to the COVID-19 pandemic, a defining challenge of our time, was reviewed and strategized. Climate change, a pressing threat to the continent’s future, was not neglected.

The AfCFTA actively aims to bolster intra-African trade, generate new jobs, and nurture innovation across the continent. By removing tariffs and non-tariff barriers, AfCFTA aims to facilitate the movement of goods, services, people, and capital across borders. This will increase competitiveness, productivity, and industrialization in Africa.

The 36th AU Summit AfCFTA was an important milestone in advancing AfCFTA implementation. It delivered key outcomes and decisions. For example, the launch of the online platform for tariff negotiations and concessions, the adoption of rules of origin, and the endorsement of the African Trade Observatory. While the AU Summit focuses on African trade, other global events in 2023, like the Winter Olympics, are uniting nations in different ways.

In this article, we will explore the main outcomes and decisions of the 36th AU Summit AfCFTA. It also discusses the challenges and opportunities for AfCFTA implementation. We actively encourage individuals and stakeholders to explore the avenues for involvement and benefit associated with the AfCFTA. Let’s dive in and discover how AfCFTA will boost intra-African trade, create jobs, and foster innovation in Africa.

What is AfCFTA, and why is it important for Africa?

The African Continental Free Trade Area (AfCFTA) is a trade agreement. It aims to create a single market for goods and services, as well as a customs union, among the 55 AU member states. 44 countries actively signed the AfCFTA agreement in March 2018 in Kigali, Rwanda. Subsequently, it entered into force in May 2019 after ratification by 22 countries.

The AfCFTA actively targets to boost intra-African trade. Currently, it accounts for only 17% of the continent’s total trade, to unlock greater economic opportunities for African nations. By removing tariffs and non-tariff barriers, AfCFTA will facilitate the movement of goods, services, people, and capital across borders. This will increase competitiveness, productivity, innovation, and industrialization in Africa.

The AfCFTA actively plays a catalytic role in promoting regional integration and driving economic development across Africa. It will create a larger market of 1.3 billion people with a combined GDP of $3.4 trillion. It will also enhance Africa’s bargaining power and voice in global trade negotiations.

Governments actively implement tariffs, essentially taxes on goods traded internationally, while non-tariff barriers, distinct from tariffs, create obstacles to international trade. The country’s government actively implements a range of administrative measures. For example, inspections and licensing requirements, to discourage the influx of imported goods and promote the production and consumption of domestic items.

Goods and services

Goods and services that can benefit from AfCFTA include agricultural products, textiles, and manufactured goods. The agreement is expected to increase the competitiveness of African businesses and promote the growth of small and medium-sized enterprises.

According to the United Nations Economic Commission for Africa (UNECA), AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade. It would encourage more industrial goods as opposed to extractive goods and natural resources.

AfCFTA can be compared to other regional trade agreements such as the European Union (EU) or the North American Free Trade Agreement (NAFTA). The EU is a political and economic union of 27 member states located primarily in Europe. NAFTA is a trilateral free trade agreement between the United States, Canada, and Mexico. While the EU and NAFTA are more established and have been in place for a longer time, AfCFTA is a newer agreement that is expected to have a significant impact on the African economy.

What were the main outcomes and decisions of the 36th AU Summit AfCFTA?

The 36th AU Summit AfCFTA focused on reviewing the progress and challenges of the African Continental Free Trade Area (AfCFTA) implementation, as well as adopting a roadmap and action plan for its operationalization.

Key outcomes and decisions

Some of the key outcomes and decisions of the summit were:

• The launch of the online platform for tariff negotiations and concessions, which will enable countries to submit their offers and requests for market access. This platform will facilitate the negotiation of tariff reductions and the resolution of disputes among member states.
• The adoption of the rules of origin, which will determine the origin and eligibility of products for preferential treatment under AfCFTA. This will ensure that only goods that are produced in Africa or have a significant African content can benefit from the agreement.
• The endorsement of the African Trade Observatory, which will provide data and analysis on trade flows, trends, and opportunities in Africa. This will help policymakers, businesses, and investors to make informed decisions and identify new areas of growth and cooperation.
• The approval of the establishment of the Pan-African Payments and Settlements System, which will facilitate cross-border payments and settlements in local currencies. This will reduce the reliance on foreign currencies and increase the efficiency and security of transactions among African countries.
• The election of H.E Azali Assoumani, President of the Union of Comoros, as the new Chairperson of the AU for the year 2023. He will lead the organization and represent it in international forums and negotiations.
• The appointment of Dr Jean Kaseya as the Director General of the Africa Centres for Disease Control and Prevention (Africa CDC). He will oversee the organization’s efforts to prevent, detect, and respond to public health emergencies and pandemics in Africa.

Significance

These outcomes and decisions are crucial for the implementation and success of 36th AU Summit AfCFTA. They will help to remove barriers to trade, promote economic integration, and foster innovation and entrepreneurship in Africa. However, there may be challenges and controversies that arise from the implementation of these decisions, such as disagreements over tariff reductions, disputes over rules of origin, and concerns over data privacy and security.

What are the challenges and opportunities for AfCFTA implementation?

Challenges

The implementation of the African Continental Free Trade Area (AfCFTA) faces several challenges, such as:

• The lack of adequate infrastructure, such as roads, railways, ports, and energy networks, that hamper connectivity and trade facilitation.
• The persistence of security threats, such as terrorism, armed conflicts, and political instability, that undermine peace and stability in some regions.
• The impact of the COVID-19 pandemic, which has disrupted trade flows, supply chains, and economic activities in Africa and beyond.
• The diversity of legal frameworks, regulations, standards, and policies among countries that create complexity and uncertainty for traders and investors.
• The resistance from some sectors and groups that fear losing market share or revenue due to increased competition or lower tariffs.

Opportunities

However, AfCFTA also offers many opportunities for Africa to overcome these challenges and achieve its potential. Some of these opportunities are:

• The potential to create millions of jobs, especially for the youth and women, who constitute the majority of Africa’s population.
• The opportunity to diversify and add value to Africa’s exports, which are currently dominated by primary commodities.
• The possibility to foster innovation and entrepreneurship by creating a conducive environment for small and medium enterprises (SMEs) to access regional markets.
• The chance to leverage digital technologies to enhance trade efficiency, transparency, and inclusiveness.
• The prospect to strengthen regional cooperation and solidarity by addressing common challenges and pursuing shared interests.

To address the challenges, African countries need to invest in infrastructure development, enhance security cooperation, and harmonize their legal frameworks and policies. They also need to promote public-private partnerships, encourage innovation and technology transfer, and provide capacity-building support to SMEs and entrepreneurs.

To seize the opportunities, African countries need to prioritize job creation, value addition, and diversification in their trade policies and strategies. They also need to embrace digital transformation, promote cross-border e-commerce, and enhance regional integration and cooperation. By doing so, they can unlock the full potential of 36th AU Summit AfCFTA and contribute to the sustainable development of Africa.

How can you get involved and benefit from AU Summit AfcFTA?

The African Continental Free Trade Area (AfCFTA) is not only a government-to-government agreement but also a people-to-people initiative. Therefore, it requires the active participation and support of all stakeholders, including civil society, private sector, academia, media, youth, women, diaspora, etc.

Involvement and benefits

Here are some ways you can get involved and benefit from AfCFTA:

1. Educate yourself and others: Learn about the benefits and opportunities of AfCFTA, as well as the rights and obligations of traders and consumers. Share this knowledge with your community and raise awareness about the potential impact of AfCFTA.
2. Advocate for ratification and implementation: Encourage your country to ratify and implement AfCFTA. Advocate for the harmonization and simplification of trade rules and procedures to facilitate cross-border trade and investment.
3. Engage with authorities and institutions: Engage with your national and regional authorities, as well as the AU organs and institutions, to provide feedback and input on AfCFTA policies and programs. Participate in consultations, conferences, and working groups to contribute to the decision-making process.
4. Explore new market opportunities: Seize the new market opportunities that 36th AU Summit AfCFTA offers. Identify value-added products and services that meet the needs and preferences of African consumers. Expand your business or explore partnerships to tap into the growing African market.
5. Collaborate with stakeholders: Partner and collaborate with other stakeholders across borders. Share best practices, exchange information, and build networks to enhance your business or professional opportunities. Collaborative efforts can lead to innovative solutions and mutually beneficial outcomes.

For more information and guidance on how to get involved or benefit from AfCFTA, you can visit the official AfCFTA website. The website provides resources, publications, and contact information to help you navigate the opportunities and challenges of 36th AU Summit AfCFTA.

Remember, your active involvement can contribute to the success of AfCFTA and the economic development of Africa. Together, we can build a prosperous and integrated African market.

Final Words

The African Continental Free Trade Area (AfCFTA) is a historic and transformative project that aims to create a single market for goods and services in Africa. It has the potential to boost intra-African trade, foster regional integration, and spur economic development. However, it also faces many challenges that require collective action and political will.

The 36th AU Summit AfCFTA was an important milestone in advancing AfCFTA implementation. It delivered several key outcomes and decisions that will pave the way for its operationalization. However, much more work remains to be done to ensure its effective and inclusive realization.

AfCFTA is not only a matter of governments but also of people. Therefore, it is crucial that all stakeholders get involved and benefit from AfCFTA. By doing so, we can make AfCFTA a reality and a success for Africa.

AfCFTA is a promising initiative that can transform the African economy and improve the lives of millions of people. It requires the commitment and cooperation of all African countries and stakeholders to overcome the challenges and seize the opportunities. Let us work together to build a prosperous and integrated African market.