The announcement of the African Continental Free Trade Area Agreement (AfCFTA) was met with great optimism and hope for the continent by Africans and the rest of the world. According to the World Bank figures, AfCFTA will connect over 1.3 billion people across Africa with a combined gross domestic product of US$3.4 trillion. 

Perhaps a continent that thrives so much economically on the export of food products and raw materials during the pre-independence era could finally be on its way to fulfilling its enormous potential. 

On March 21st, 2018, forty-four (44) out of fifty-five (55) member countries of the African Union met in Kigali, Rwanda, to agree and subsequently signed the Africa Continental Free Trade Agreement. Political economists consider the agreement a breakthrough, as it represented the most significant agreement regarding the number of participating countries.

The deal has continued to receive support across the continent, with ten more countries committing to it. After ratification by 22 signatory states, the AfCFTA came into full force on May 30th, 2019, and the AU launched the operational phase on July 7th, 2019, following a summit. The thirty-six (36) countries that have also submitted their instruments of ratification have ratified the agreement, and it is operational within those countries only.  

The AU assembly under the chairmanship of the President of South Africa Cyril Ramaphosa had confirmed in December 2020 the agreement would kick off under the new accord in January 2021 after a six-month delay following the coronavirus pandemic. 

The AfCFTA has its primary idea centered on intra-Africa trade with free movement and removal/reduction (liberalization of 90%) of tariff on goods, services, right of residence, and establishment across African countries. 

What has followed the pact’s announcement is typical of African countries and leaders since the post-independence era – ambitious plans with no clear-cut strategy for implementation. Although the AfCFTA agreement offers hope in the light of clear-cut procedure, this is clear in the pact’s implementation divided into operational phases. However, implementing the deal is way behind schedule in many countries because of political and social factors and the covid-19 pandemic.

The coronavirus pandemic had devastating effects in the commencement of trading under the AfCFTA agreement. Trading under the pact was scheduled to begin on July 1st, 2020. Still, it was postponed to January 2021 because of the lockdown that resulted from the COVID-19 response, which forced many countries to ban the movement of people and goods across borders to curb the further spread of the deadly virus. 

The AfCFTA Secretariat 

The commissioning of the AfCFTA secretariat in Accra, Ghana, on August 17th, 2020, at a ceremony where Ghanaian President, Nana Akufo-Addo, handed the administration to the Chairperson of the African Union, Moussa Mahamat, represented a considerable step forward in the pact’s implementation. Mr. Akufo-Addo further announced the provision of an official residence for the Secretary-General of the AfCFTA. 

The establishment of the AfCFTA secretariat enabled the flagship project of the African Union Agenda 2063 to proceed and be managed effectively. 

How has trading fared so far? 

January 6th, 2021, four days after the official commencement of trading under the AfCFTA agreement, two Ghanaian companies became pioneer companies to register, get licenses, and freight products to any member countries of the African Union under the AfCFTA pact. The singular act signifies a giant step and a historic event in the AfCFTA agreement that spanned over five years of negotiation, signing, and commencement of trading after the covid-19 pandemic delay.

The first consignment of products under the AfCFTA was celebrated in an event organized by the Government of Ghana where Kasapreko Company Limited, an indigenous alcoholic product manufacturer, air-shipped a 20-footer container of alcoholic beverages to South Africa. Also, Ghandour, a cosmetic manufacturing company, shipped products by sea to the Republic of Guinea.

Challenges so far? 

Despite 36 AU member states depositing their ratification instruments, only three countries- Ghana, South Africa, and Egypt-established the required custom infrastructure for trading as of January 2021. This led the Council of Ministers, one of AfCFTA decision-making bodies, to direct member states yet to meet the custom requirements to set up escrow accounts to reimburse traders under the AfCFTA pact. However, there is a high hope that other countries will follow suit and provide the infrastructure to enable trading soon. 

Payment resulting in currency exchange has also proved to be a cog in the wheel. However, the leadership of the AfCFTA has undertaken big moves by rallying the African Export and Import Bank (Afreximbank), a pan-African multilateral financial institution, to design, develop and implement the Pan-African Payment and Settlement System (PAPSS). They aim the PAPSS project to ease the conversion of multiple currencies across the continent, providing up to $3 billion to support the project. 

Phases of implementation

They phased implementation of the AfCFTA agreement with timelines to enable effective monitoring and ensure the realization of the project. 

Phase I involves negotiation on protocols on trade in goods. This is also when they will sort services and dispute settlements before the end of June 2021.

Phase II involves negotiation on protocols for investment, intellectual property rights, competition, and e-commerce, which will be completed by the end of 2021.

What does the future hold? 

More than ever before, African countries need to trade more with one another as intra-African trade accounts for only around 17% of all exports. To reposition its economy, alleviate poverty across the continent by increasing market integration, accelerating industrial developments, promoting free trade, and open markets. The coronavirus pandemic has forced many countries into high debts, devastating the economy and untold hardship. There is no better time for Africa to speed up economic growth and market integration than now. 

By 2050, we expect the African economy to reach US$29 trillion with the AfCFTA, eliminating barriers to trade and the movement of people across the continent. But all hands must be on deck to actualize the realization of AfCFTA for the greater good of the continent. 


This article conveys the views of the author and not necessarily that of Ominira Initiative.

About the author

Oluwatobi Ojo

Oluwatobi writes on economic issues, public policy, politics and technology. He tweets @Mrtobi_