Although the African Continental Free Trade Area (AfCFTA) officially came into effect in January 2021, no trade has yet taken place under the AfCFTA regime, according to Tralac. It says preferential AfCFTA trade can only truly begin once negotiations on issues such as tariff concessions and rules are finalised.As a pilot, trade in goods has started under the AfCFTA’s Guided Trade Initiative, which has a separate legal basis, Directive 1/2021 of the AfCFTA Council of Ministers.The AfCFTA goal is to establish a common market in which 97% of the current tariffs on intra-African trade in goods are removed by 2037.This is intended to spark a wave of investment which will lead to investment in job-creating industrialisation by companies wanting to access the world’s biggest trade bloc of 1.4 billion people and a combined gross domestic product of $3.4 billion. An AfCFTA Investment Protocol was adopted by the 36th Ordinary Session of the AU Assembly in February 2023.The priority sectors for industrialisation under the AfCFTA are automotives, pharmaceuticals, transport and logistics, and agri-business.Alex Irwin-Hunt of FDI Intelligence says a long and difficult road lies ahead for AfCFTA to boost internal trade and investment. He points out that United Nations figures show that intra-African trade as a share of global trade declined from 14.5% in 2021 to 13.7% in 2022. For 11 of the continent’s leading economies, intra-African trade was valued at $85.3bn in 2023, or just 11.8% of total African trade. This is down from 13.2% in 2019, according to Trade Data Monitor. Challenges identified by Irwin-Hunt include “perpetual” negotiations between the 50 member states, different levels of economic development, the existence of eight regional economic communities, a lack of access to business finance, and inadequate logistics infrastructure. ER
