Ratification of the Agreement establishing the African Continental Free Trade Area

On 2 April 2019, the Gambian parliament passed the twenty-second ratification of the Agreement establishing the African Continental Free Trade Area (AfCFTA) triggering the process to bring it into force. However, a number of the protocols and some key schedules and annexes still remain in the process of being developed and are expected to be concluded by 2020.

The agreement was signed on 21 March 2018 by 44 member states of the African Union (AU) and subsequently has been signed by 8 more and required 22 ratifications to come into force. The next step is for Gambia to deposit its instrument of ratification and, 30 days after that occurs, the agreement and associated protocols will come into force.

The AfCFTA will make Africa the largest free trade area created since the formation of the World Trade Organisation (WTO) and is intended to particularly benefit SMEs and young people. Nevertheless the AfCFTA initiative faces many challenges. Nigeria, Africa’s largest economy and most populous nation is one of 3 countries that chose and continue not to participate. The Nigeria Labour Congress opposes the plan, calling it a "renewed, extremely dangerous and radioactive neo-liberal policy initiative". Others pointed to potential job losses and adverse effects on the development of domestic manufacturing capabilities. Leaders at the March 2018 meeting made a strong plea for the private sector to work with government to make the AfCFTA a reality since the provisions in the agreement will need to be implemented through legislative changes and administrative action at national level.

Source: UN Economic Commission for Africa (ECA)

The Assembly of the AU and the Council of African Ministers responsible for Trade provide the institutional framework for AfCFTA. Decisions of the Council are binding on the member states. The Committee of Senior Trade Officials implements the Agreement and the Council’s decisions. An independent AfCFTA Secretariat within the AU will oversee, coordinate, facilitate and support the implementation and enforcement of the AfCFTA Agreement, and decisions of the institutions.

In the light of the controversial decision by the European Union to choose an investment court (yet to be set up) to resolve differences between investors and states in some of its recent free-trade agreements (with Vietnam and Canada), the proposed form of Investor-State Dispute Settlement (ISDS) under AfCFTA is awaited with much interest.

See further our report Investing in Africa: A guide to mitigating risk.