South African President Cyril Ramaphosa is hopeful an agreement that could see the continent become the world’s largest free-trade zone will boost the country’s sluggish economy. But the targeted start date is fast approaching and nations have yet to agree to any tariff concessions.
The African Continental Free Trade Area, will be a “game changer” for South Africa, Ramaphosa said in his weekly letter to citizens Monday. Africa’s most-industrialized economy is “well-placed” to benefit due to its established manufacturing base, developed infrastructure and deep financial markets, he said.
First trade under AfCFTA is due to start July 1, but members haven’t settled on rules that determine the nationality of products, according to the Stellenbosch-based Tralac Trade Law Centre. Also, existing regional economic communities must still negotiate tariff liberalization with their member states. AfCFTA’s precursor, the Tripartite Free Trade Area launched four years ago, has yet to come into effect.
“The target is ambitious to say the least,” said Ronak Gopaldas, a director at Signal Risk, an Africa-focused risk-management firm. “Ultimately, achieving this timeline will come down to one thing — political will. Getting countries to align continental objectives with a domestic agendas will not be an easy task, especially in a context of rising global populism and nationalism and where protectionist approaches are being advocated by many countries.”
AfCFTA entered into force on May 30, and could cover a market of 1.2 billion people with a combined gross domestic product of $2.5 trillion, according to the African Union, which is leading the initiative. All but one of the 55 countries recognized by the body have signed the deal, Eritrea being the exception. Twenty-seven countries, including South Africa, have ratified the agreement, which should be fully implemented by 2030.
Intra-African exports comprised 16% of the continent’s shipments in 2017, with South Africa as the main exporter and importer, Tralac data show. The country accounted for 34% of intra-African exports and 17% of imports, it said.