The African Continental Free Trade Area continues to receive support across the continent as a game-changer for free trade in Africa, and a path to economic prosperity for the African people. However, progress on its implementation has been slow. DevDispatch contributor Oluwatobi Ojo spoke with Lanre Elfusian, the Executive Director of Ominira Initiative– a Nigerian think-thank advancing solutions through policy research and advocacy- about the low traction of trade under the AfCFTA.

Oluwatobi: Thank you for joining us in this important discussion. Can you please introduce yourself?

Lanre: My name is Lanre Elfusian, the Executive Director of Ominira Initiative.

Oluwatobi: Undoubtedly, the AfCFTA holds enormous potential, however, trade has not quickened as expected under the agreement. What could be the reason for this and what can be done to address this?

Lanre: One of the reasons why the AfCFTA has not quickened as expected is definitely the challenges; first politics. We cannot rule out the role politics is playing/will play in an agreement as big as the AfCFTA. Remember that the AfCFTA is the world’s largest trade agreement in terms of the countries involved.

Another challenge expected as Africans is a lack of capacity. Most African countries are not highly productive. Africa is a continent where we consume more than we produce. Truthfully, we have abundant natural resources, but unfortunately, we do not turn those raw materials into finished goods for export. There is a gap in the productivity of most African countries and in the case of countries that are productive like South Africa, Morocco- there are averagely more productive than most African countries like Uganda, and Sudan.

There is a concern for productivity and capacity and infrastructural deficit for a trade agreement that is as wide as 54 countries. There is a need for infrastructure like roads that connect the continent. The AfCFTA is currently involved in a road project that connects about 4-6 countries. We need more infrastructure like that. The financial capability of African countries is also a contributing factor. A lot of African countries have a huge debt that requires yearly servicing, leaving less money for building infrastructure to enhance this agreement.

Oluwatobi: The AfCFTA will eliminate over 90% of tariffs on goods and services. However, some smaller economies depend on these tariffs to fund their budget. How can economies like this key into the AfCFTA?

Lanre: I believe that most African countries rely more on import tariffs to fund their annual budget. That is why it is easier for Africa to trade with other continents than trading with itself. Import tariffs are a key source of revenue for the government in Africa. In 2022, the Nigeria Customs Service (NCS) of the Muritala International Airport reported a 9% increase in their financial report totalling about N20b. Around November, the NCS reported N2.4t in revenue. For a country like Nigeria, that’s a huge source of revenue. So eliminating 90% of the tariff becomes a problem for the government, keeping in mind the continuous debt servicing.

It is also one of the reasons why the agreement has not quickened as most countries are concerned about the loss of revenue. However, the wins outweigh the losses. Every African country has a comparative advantage to offer in the regional market. Nigeria has crude oil as a key source of petroleum products in Africa, while Ghana and Cote d’Ivoire have an abundance of cocoa. Another advantage for smaller economies is for the consumers as they will benefit from access to quality products across the continent. While it will pose a threat to local industries, it will give rise to new industries, healthy market competition and a much bigger market to export their best products to one billion people. It’s a question of long-term gain over short time gain. Regardless of size, every African country must seize this as an opportunity to have a wide market of over a billion people.

Oluwatobi: The supply chain is critical to the success of intra-African trade. As it stands, it is easier to trade with China than trade with African countries. How can African countries leverage existing infrastructure to boost intra-African trade?

Lanre: Yes, we have existing infrastructure, but we need to break down the walls that we have put up. I saw a video recently on Youtube of a Ghanaian influencer who was harassed by border officials at the Aflao border somewhere in West Africa raising objection to denial of entry across the border. Basically, we need more infrastructure like roads, rails, airports and ports. We need more technology to improve the supply chain of the AfCFTA. However, we can still make use of existing infrastructure, even though it’s still lacking. We need to break down artificial walls and barriers. Speaking in one video, Africa’s richest man, Aliko Dangote, said the AfCFTA is a good thing, but let’s make ECOWAS and the regional economy work first. If in ECOWAS, there is no free flow of trade, with high tariffs, restrictions on import and export, insecure border areas, the existing infrastructure cannot be efficient. In addition, there is a need for unity of purpose. Even though 45 African countries have ratified the agreement, the political will to fully implement the agreement is not the same. Countries like Ghana and Kenya are quite enthusiastic.

Oluwatobi: In your opinion, how soon can Africans begin to experience the impact of the AfCFTA?

Lanre: To be honest, it will take a while to see the full implementation of the AfCFTA, because all countries will not open up to it immediately. Some will be slow, but in the long run, they will open up when they begin to see the benefits. It is not until most African countries implement the agreement fully in their respective countries, that we will begin to realise its benefits.

Oluwatobi: With a low volume of trading under the agreement, how can the private sector partner with the government to spur a speedy take-off of the agreement?

Lanre: The level of awareness in the private sector is low. Recently, in a webinar with a group of people across the continent discussing the efforts of the governments of the respective countries towards AfCFTA, we realised the level of private sector awareness is low in South Africa, Ghana, Tanzania and even Nigeria. The government must take deliberate action to involve the private sector and make it easier for them to be partners.

Oluwatobi: The AfCFTA has been lauded and commended since its conception. Should Africa remain optimistic despite its initial challenges?

Lanre: Yes! I think that we should be optimistic. I believe so much in the agreement to transform this continent. Europe has done it. We’ve seen free trade work, and know the opportunities it will have in Africa. However, there are challenges that we will have to overcome to make it work. As citizens, the professional and private sectors must keep the government accountable and ensure it is properly done.

Oluwatobi: Africa has one of the most youthful populations with about 60% under the age of 25. What does the agreement mean for young people and how can they contribute to its success?

Lanre: The AfCFTA for young Africans means more opportunities. Imagine the freedom it affords young Africans to live and work anywhere on the continent without restrictions. It will lead to the free flow of ideas and services. However, young Africans and entrepreneurs need to be up-to-date and aware of emerging issues of the AfCFTA, in order to be able to take advantage of it.

Oluwatobi: Any parting words?

Lanre: Well, the AfCFTA is a great initiative and long overdue in Africa, but thankfully we are at it now. The commitment that the secretariat, the African Union and some countries are putting in to see the agreement succeed is commendable. No doubt, there will be losses, but the gain will definitely outweigh the losses.