On April 2 the Gambia’s parliament wrote itself into modern African history when it ratified the Africa Continental Free Trade Agreement (AfCFTA). It became the 22nd country to do so, pushing the plan across an agreed threshold for it to “come into force”.

This does not mean African countries will be dropping tariff and non-tariff barriers and allowing unhindered trade anytime soon. But it does mean serious negotiation towards that goal can begin.

It is one small step towards the giant leap Africa needs to take to become a significant player in international trade. As is often said of Africa, how can it be a force in the world if its 55 countries cannot even do business among themselves?

The AfCFTA was enacted in Rwanda in March of 2018 and 52 countries quickly signed up. The lure for African leaders was being part of the biggest trade bloc in the world — 1.2 billion people and a potential market of US$3 trillion, according to the World Economic Forum.

Intra-continental trade is less than 20 percent of Africa’s total, while Europe and Asia are at 69 percent and 59 percent respectively. Making it easier for Africans to exchange goods and services with one another will unlock the continent’s economic potential and the AfCFTA — if implemented immediately, with 90 percent of import tariffs removed — would grow Africa’s intra-continental trade to 52 percent by 2022, the African Union says.

With 22 ratifications, the AU’s technocrats have the green light to start sketching out how the Big Idea might work. They must untangle a daunting web of tariffs and regulations between a patchwork of countries, not to mention eight official economic communities.

Sceptics say prospects of realising the vision are dim. After all, smaller, regional free trade pacts have been hard to conclude. The Southern African Development Community (SADC), for example, has been around for a while but its broad trade and economic integration goals remain elusive. The so-called Tripartite Free Trade Area — linking the SADC, Comesa and the EAC — was conceived more recently to much acclaim, but has stalled.

Screen Shot 2019-05-23 at 11.30.59 AM

Free trade areas offer many advantages, such as greatly expanded markets for countries and companies, big and small; economic growth, thanks to growing manufacturing sectors, burgeoning small businesses and job creation; attracting more foreign direct investment; and reduced input costs due to cheaper raw material imports and location of production in cheaper centres.

Add in the greater international bargaining power of a single, large bloc over individual small economies and consolidation looks like a no-brainer.

Pan-Africanism has long been a mantra, but realities of nationalism and sovereignty see borders and divisions remain firmly in place. And there are real concerns that free trade could see smaller economies and communities adversely disrupted, even swept away. Africa has wider wealth disparities than any other region of the world, with more than 50 percent of its GDP contributed by Nigeria, South Africa and Egypt. Harmonising economies to create a fair and equitable trading environment will be extremely challenging.

As much as open trade routes help small businesses grow, they threaten those not as competitive as the “invaders”. Localised job losses are feared.

These are among the reasons why the continent’s biggest economy, Nigeria, is the elephant in the room — one of the three countries not to have signed the AfCFTA. The others are Benin and Eritrea.

Ayuba Wabba, Nigeria’s leading trade unionist, describes the AfCFTA as “an extremely dangerous and radioactive neo-liberal policy initiative”.

However, the agreement does offer some comfort to doubters, for example specifically having provision for anti-dumping measures and protection for “infant industry”.

Concerted diplomatic efforts are being made to bring Nigeria around. Its leaders are hearing persuasive arguments about how intra-African trade can turn the tide on the continent’s poverty and dependency.




LEX Africa is an alliance of law firms with over 600 lawyers in 24 African countries formed in 1993. More information may be found at


Screen Shot 2018-03-13 at 1.28.45 PM







T: (27) 11 535 8000

Related Articles by Firm
Africa: The effect of Covid-19 and business resilience
Companies worldwide are, or will inevitably be, affected in the short and medium-term by the coronavirus pandemic (Covid-19). Decline in commodity prices due to the falling demand in China, travel restrictions ...
Africa: Boon for investors as Zimbabwe enacts new investment promotion law
On February 7, 2020 the Zimbabwe Government gazetted the long-awaited Zimbabwe Investment and Development Agency Act (Chapter 14;37). The new law comes in against the backdrop of promoting the ease of doing business in the country ...
Africa: Community issues and resource nationalism adding pressure on the mining industry
As if mining by its very nature is not difficult enough from a technical, financial, environmental and labour point of view ...
Opening the money taps into Africa
Akinwumi Adesina is not a name most people in Africa would recognise, yet it belongs to a man who is, arguably, doing the most to haul the continent out of a rut of underdevelopment and improve the lives of its ...
Coal-driven power train is running out of steam
The African Development Bank that it is making a surprise policy turn away from fossil-fuel investment and ploughing a new renewable energy path ...
Sun, wind and water stir up Africa’s energy mix
Obstacles to faster development of green energy abound everywhere, but the trend is clear and the momentum unstoppable.
Africa: Guinea emerging from the shadows
Recent reports from three respected international organisations sketch a relatively upbeat picture of economic prospects in the west African state of Guinea ...
AFRICA: How Nigeria is going local
Promoting “indigenisation” in the Nigerian economy was the subject of a recent Lex Africa seminar, which asked how foreign investors were forging partnerships with local players, using local content and local manufacturing capacity and transferring valuable work skills ...
Local content and participation in Ghana’s electricity supply industry
In line with the national push for a more structured approach to increasing local content and participation, the Regulations came into force on December 22, 2017 ...
Zimbabwe’s ratification of the WTO Trade Facilitation Agreement
Recently, Zimbabwe, a member of the WTO since 1995, ratified the WTO Trade Facilitation Agreement (TFA) becoming the 139th WTO Member State to ratify this Agreement ...
African competition law developments in 2018 and the outlook for 2019
Africa is sometimes described as the “last frontier” of competition law because many African countries have only recently adopted modern competition laws ...
Blockchain, cryptocurrencies and the law in Uganda
By far the most significant headline-grabbing development in 2017 and 2018 relates to the stunning rise of blockchain ...
Tanzanian government releases Microfinance Bill
In a bid to ensure proper licensing, regulation, monitoring and supervision of microfinance business in Tanzania, the Minister for Finance has issued a draft Bill on Microfinance to be tabled in the National Assembly very soon ...
Ethiopia’s arbitration law challenges
Arbitration is perceived as one of the alternative solutions to congestion in the court system ...
Developments in competition law in Africa
At LEX Africa’s June seminar on developments in competition law in Africa, speakers discussed the increasing trend of governments to try and use competition law as an important part of their industrial policy ...
Zimbabwe holds massive potential for private equity investors
The country’s infrastructure is broken, but there is room for smart investors to capitalise on its rehabilitation.
Impact of the amendment of the Legal Guarantee of Stability in respect of existing mining projects in the DRC
The Government of the Democratic Republic of Congo (DRC) commenced the review process in respect of its Act No. 007/2002 of July 11, 2002 on Mining Code (Mining Code) in 2012. The process eventually culminated in the promulgation by the President of the Republic ...
Mozambique is addressing economic reform in a big way in 2018
Significant strides in Mozambique’s legislation and policies could see a rapid turnaround in the country’s economic situation. In 2016, inflation peaked at 26 percent ...
Increasing importance of African regulatory issues for M&A, trade and investment
It is important to remember that Africa is not a country but consists of 54 sovereign states and a huge diversity of cultures, customs, languages, ethnic groups and religions ...
Related Articles
Related Articles by Jurisdiction
South Africa: Transfer pricing legislation to be amended again
The draft Taxation Laws Amendment Bill, released on 17 July 2014, proposes certain changes to the transfer pricing secondary adjustment mechanism. The proposed changes took effect on 1 January 2015.
Zimbabwe holds massive potential for private equity investors
The country’s infrastructure is broken, but there is room for smart investors to capitalise on its rehabilitation.
Zimbabwe’s ratification of the WTO Trade Facilitation Agreement
Recently, Zimbabwe, a member of the WTO since 1995, ratified the WTO Trade Facilitation Agreement (TFA) becoming the 139th WTO Member State to ratify this Agreement ...
Latest Articles