(Ecofin Agency) - The report stresses that now more than ever, African countries need to bridge the infrastructure gap, drive structural economic transformation, and establish effective mechanisms to identify and remove non-tariff barriers to strengthen regional value chains.

While nearly all African countries back the African Continental Free Trade Area (AfCFTA), the process of economic integration remains sluggish. Concerns over lost customs revenue, persistent non-tariff barriers, and overlapping regional trade agreements continue to slow progress, according to a report published on January 23, 2025, by the think tank The South Centre.

Titled "Assessing Five Years of the African Continental Free Trade Area (AfCFTA): Proposals on Potential Amendments," the report reflects on this zone, which was officially launched on March 21, 2018, in Kigali, Rwanda. The goal was to create a single continental market of 1.3 billion consumers with a combined GDP of $3.4 trillion. This integrated market was expected to increase intra-African trade by 53%, add $1 trillion in industrial value, lift 50 million people out of poverty, and generate 14 million new jobs.

Despite these ambitious goals, the reality has been much slower. From the outset, it was clear that African Union (AU) member states had different levels of commitment. At the Kigali summit, 44 out of 55 AU members signed the AfCFTA agreement, 47 signed the Kigali Declaration, and 30 signed the protocol on free movement, residency, and establishment rights. Over time, participation has expanded, with 54 countries now signed on and 48 having ratified the agreement.

In terms of trade in goods, the number of provisional tariff concession lists for market access grew from 42 to 45 by February 2024. On the services side, 22 specific commitments covering five priority sectors have been adopted. The timeline for phasing out tariffs was only finalized in 2024, given its gradual nature. However, rules of origin—critical for determining the origin of goods and their eligibility for preferential treatment—are still unresolved for key sectors such as automobiles, textiles, and apparel.

The Challenge of Comparative Advantage

The Guided Trade Initiative (GTI), launched on October 7, 2022, enabled eight countries—Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia—to begin trading under AfCFTA’s preferential terms. The trade list includes pharmaceuticals, rubber, pasta, tea, coffee, steel, and wood. In 2023, the initiative was expanded to include more products and countries. However, actual trade volumes under this initiative remain minimal.

A major stumbling block is the fear of losing customs revenue due to trade liberalization. Many experts argue that, over time, these losses will be offset by increased trade among African nations. This assumption is based on the classical economic theory of comparative advantage, where each country specializes in the goods and services it produces most efficiently. However, this theory has proven ineffective in Africa, where multiple structural issues still hinder regional trade.

The biggest challenges include poor transportation infrastructure, weak logistics services, widespread non-tariff barriers (such as import bans, quotas, restrictive licenses, and subsidies), restrictions on the movement of people, and inconsistent rules of origin. These same obstacles have already complicated trade within regional economic communities such as the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).

Transforming AfCFTA into a Growth Engine

Other issues slowing AfCFTA’s implementation include overlapping memberships in regional trade blocs, similarities in the export baskets of many countries, conflicting trade agreements with external partners, heavy reliance on foreign aid by the AU and regional economic bodies, and rushed negotiations that prioritize political deadlines over practical implementation.

The report identifies three main barriers to AfCFTA’s success: limited production capacity and economic diversification, which restricts the range of goods available for trade and limits regional value chains; high trade costs linked to tariffs and slow implementation of tariff liberalization schedules; and the heavy burden of non-tariff measures, which increase intra-African trade costs by around 283%.

To address these challenges, The South Centre recommends that African countries prioritize infrastructure projects under the Program for Infrastructure Development in Africa (PIDA), establish a Simplified Trade Regime (STR) to ease customs procedures for small cross-border traders, and create efficient mechanisms to identify, report, and eliminate non-tariff barriers.

The intergovernmental think tank, founded in 1995 by 55 developing countries to advocate for the Global South, also urges African nations to build on the progress made by regional economic communities to speed up the harmonization of rules of origin. Additionally, it calls for a stronger focus on industrial diversification and production capacity, shifting AfCFTA from a simple trade liberalization agreement to a powerful driver of Africa’s economic transformation.