Can reducing Non-Tariff Trade Costs in Africa be the gamechanger for the African Continental Free Trade Area

The AfCFTA – an opportunity to boost intra-Africa trade
The African Continental Free Trade Area (AfCFTA) which is set to be the largest free trade area (FTA) in the world with 54 of the 55 members of the Africa Union being signatories to the Agreement. The AfCFTA if fully implemented, is expected to provide a major opportunity for African countries to attract Foreign Direct Investment (FDI), diversify exports, boost intra-African trade, boost growth, reduce poverty, foster economic inclusion, and promote sustainable economic development[1].

Currently, countries are not trading under the AfCFTA trading regime, however, Phases I and Phase II negotiations have been completed albeit tariff concessions and rules of origin (RoO) negotiations for some products are still underway. These two issues, partly attribute to the reasons why it is not yet possible to trade under the AfCFTA. Phase III negotiations are currently underway and include protocols on additional topics such e-commerce. Trade and Women and Youth in Trade Protocol which was added to the AfCFTA agenda has since been concluded is expected to be approved later in 2023[2].

The Guided Trade Initiative
Despite countries, not yet trading fully under the AfCFTA, a pilot initiative called; the Guided Trade Initiative (GTI) which aims to stress test trading in goods between member countries within the operational, institutional, legal and trade policy environment under the AfCFTA was launched in Accra on 7th October 2022[3]. Eight countries are participating in this pilot. Tanzania following Rwanda, Kenya, and Ghana, have begun trading under the GTI. The AfCFTA GTI has identified 96 products, including tea, coffee, processed meat products, sugar, and dried fruits, to be traded among the participating countries. Tanzania aims to sell 10 products under the AfCFTA’s GTI including coffee and glassware[4]. Plans are underway to have a similar GTI for services subject to State Parties agreeing on modalities.

Initial assessment of the GTI reveals that there remain significant challenges for African countries to trade smoothly and boost intra-African trade mainly because non-tariff barriers (NTBs) to trade remain prevalent, massive infrastructure gaps especially transport infrastructure pose a threat to the success of not only the GTI but also to the AfCFTA. For Africa to make the most of free trade, the continent must address these challenges. Estimates suggest most African landlocked countries face high transport prices which are three to four times more than in most developed countries. Several institutional, political and other factors that combine to limit competition, encourage corruption, discourage investment and encourage informal activity attribute to the prevalent high prices in Africa[5].

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