ZLEC, or AfCFTA, the largest free trade agreement on a planetary scale, officially kicked off in Africa on 1.1.21. Great opportunities and as many challenges lie ahead in an area populated by 1,2 billion people, whose economy is now worth 2,5 trillion dollars (1,2).
ZLEC, or AfCFTA. The largest free trade agreement
The ZLEC agreement - or ZLECAf (Zone de Libre-Échange Continentale Africaine) or #AfCFTA (African Continental Free Trade Agreement) - establishes the largest single market for goods and services worldwide. 54 of the 55 African states join it, with the only temporary exclusion of Eritrea.
'It's a historic agreement, because it begins a new chapter in the history of African unity ' (Paul Kagame, president of Rwanda).
The objective is to promote and guide the development and economic growth of Africa. With a view to breaking down the internal barriers between individual countries and thus projecting the African continent towards a leading role in the global economic context. (1,2)
ZLEC, great opportunities
International observers see enormous potential in this agreement:
- by 2030, consumption (B2B and B2C) is estimated to reach US $ 6,7 trillion, offering great opportunities to international investors in Africa, (3)
- by 2035, total income could increase by US $ 450 billion / year (+ 7%), with higher wages growth for women (+ 10,5% vs 9,9% for men). With the possible relief of some 30 million people from extreme poverty. (4)
The removal of duties customs could bring some small economies, hitherto isolated, into a common economic space. The development of various industrial sectors is also envisaged. The most optimistic hope for the formation of an economic bloc capable of competing globally with other large economies. With more realism, greater self-sufficiency can be expected.
The context initial is difficult. Member States have yet to agree on details on tariff concessions and non-tariff barriers, rules of origin, timetable for the liberalization of services. 26 signatory countries have yet to ratify the agreement and some governments seem to underestimate the need to update their laws in view of the opportunities that could arise from its implementation.
Exchanges Intra-African trade today account for only 16% of the total, with tariff regimes often higher than those imposed on imports to other continents. The road and rail transport networks are very inefficient and industrialization - in the second largest continent by population after Asia - is still very backward, with a contribution of only 1,4% to world manufacturing added value (data Q1 2020, UNIDO).
The crisis generated by Covid-19 caused, among other things, the first economic recession of the last 25 years in sub-Saharan Africa (-3,3%, 2020).
ZLEC, the great challenges. Multiculturalism and infrastructures
The African Union (African Union, AU) therefore faces a number of challenges. First involve the social partners concerned and citizens, so that a socio-cultural integration that precedes and accompanies the economic one can be favored:
1) multiculturalism. The African continent expresses a perhaps unique variety of cultures and languages, ethnicities and religions, economic and political systems. To be understood as resources, rather than causes of conflict. (5) If it were not, we add, due to the controversial influences of the colonial powers,
2) infrastructure. The partner international companies to invest in local and national infrastructure projects, also through the contribution of companies already operating in the area such asAfrica Investment Forum,Afrochampions Initiative and the African Infrastructure Development Program. Only in this way will economic, demographic and productive growth be efficiently channeled and assets allocated without excessive waste and losses. (6,7,8).
ZLEC, the great challenges. Equitable development and social justice
Indiscriminate openness national markets can aggravate existing economic disparities. One should therefore resort to it, according to some economists like Landry Signé, to the Special and Differential Treatment Provisions (SDT) provided by ZLEC - AfCFTA, for the protection of least developed countries, together with assistance programs.
Member States and institutions - in fostering the development of an entrepreneurial environment that helps improve the productivity and skills of businesses and workers - should increase public investment to extend social protection coverage, improve education and health services. To ensure that wealth is inclusive and reinvested in communities, starting with young people and women. (8)
'A marathon it always starts with a step, but it is always impossible until it is completed ' (Nelson Mandela)
Dario Dongo and Elena Bosani
(1) Dario Dongo. ZLEC, the Schengen of Africa. GIFTS (Great Italian Food Trade). 27.8.18/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/mercati/zlec-la-schengen-d-africa
(2) Dario Dongo. ZLEC, the African Economic Union taking off. GIFTS (Great Italian Food Trade). 27.8.19/XNUMX/XNUMX,
(3) Angelle B. Kwemo. The AfCFTA: The first step of a long marathon. Brookings Institution. 3.9.19, https://www.brookings.edu/blog/africa-in-focus/2019/09/03/the-afcfta-the-first-step-of-a-long-marathon/
(4) World Bank. Trade Pact Could Boost Africa's Income by $ 450 Billion, Study Finds. 29.7.20, https://www.worldbank.org/en/news/press-release/2020/07/27/african-continental-free-trade-area
(5) Africa Investment Forum https://www.africainvestmentforum.com/
(6)African Union https://au.int/fr/node/34022
(7) PIDA, Program for Infrastructure Development in Africa https://www.au-pida.org/
(8) Landry Signé and Colette van der Ven (2019). Keys to success for the AfCFTA negotiations. Brookings Institution