The AfCFTA came into force

At an extraordinary African Union meeting in Kigali on 21 March 2018 44 out of 55 African states signed the African Free Trade Area agreement. After 22 of member states have deposited their instruments of ratification with the African Union Commission on 29 April 2019 the AfCFTA came into force 30 days later with meanwhile 24 member states that have deposited their instrument of ratification. Among them are Namibia, South Africa and the Sahrawi Arab Democratic Republic that is recognised by the AU as a member state. However, Africa’s largest economy Nigeria is not part of it.

While the event reflects the political commitment to continental integration, not much is actually changing on the ground. Negotiations between member states or in the case of SACU between SACU and other AU member states are still continuing with respect to tariff concessions as well as commitments on trade in services. The Ministers of Trade are requested to submit tariff concessions at the next AU meeting in July 2019 and the commitments for trade in services in February 2020, while the draft protocols on investment, on competition and on intellectual property rights are expected to be tabled in January 2021.

As the saying goes: governments do not trade, but the private sector does. Therefore, there is a need for much closer involvement of the private sector in regional and continental economic integration. We can perhaps learn a lesson from the ASEAN experience. The ASEAN member states have established a Business Advisory Council that reports directly to the Committee of Economic Ministers as well as to the Heads of State at the annual meetings reflecting the importance ASEAN attaches to the role of the private sector.

Furthermore, as Namibia diversifies its trade patterns and opens its markets to more countries, there is a need to strengthen the institutional framework. Substantial progress has been made for the establishment of the Namibian Board of Trade that will deal among others with trade tariffs, safeguard issues and rebates for specific industries. Currently, only South Africa has an active Board of Trade – the International Trade Administration Commission – and in particular the South African automobile industry benefits substantially from rebates from the SACU Common Revenue Pool. A lean, efficient Namibian Board of Trade would ensure that the playing field would be more levelled, which could help Namibia attracting additional investment. And, it would be a stepping stone towards the establishment of a SACU Board of Trade as envisaged in the 2002 SACU Agreement, which would provide the smaller SACU economies with a stronger voice in setting the Common External Tariff.

Klaus Schade

Published in Business 7 19 June 2019