Intra-African trade has long been plagued by obsolete border and transport infrastructure, and a patchwork of differing regulations across dozens of markets.
Governments have often created trade barriers to protect their markets from regional competition and as consequence, made it expensive for countries to trade with close neighbours in comparison with countries much further afield.
In a bid to address this clog, Heads of State and Government of the African Union at the 18th Ordinary Session held January, 2012, resolved to establish a Continental Free Trade Area by 2017, with the aim of creating a continental market with free movement of goods, services, people, capital, inter alia.
This resolution birthed the African Continental Free Trade Area (“AfCFTA”). This article seeks to address the role of lawyers in ensuring that the aim of this initiative is achieved.
The Background and Objective of AfCFTA
The AfCFTA is a showcase project of Agenda 2023 of the African Union – Africa focused development vision. Approved by the 18th ordinary session of the assembly of Heads of State and Government held January, 2012, it has been said to create the largest free trade area in the world, given the number of subscribing states.
Article 3 of the Agreement Establishing the African Continental Free Trade Area (AfCFTAA) has its object as follows;
- Create a single market for goods, services facilitated by movement of persons in order to deepen the economic integration of the African continent and in accordance with the Pan African vision of “an integrated, prosperous and peaceful Africa” enshrined in Agenda 2063.
- Create a liberalised market for goods and services through successive rounds of negotiations;
- Contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the state parties and REC’s;
- Lay the foundation for the establishment of a Continental Customs Union at a later stage;
- Promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State parties;
- Enhance the competitiveness of the economies of State parties within the continent and the global market;
- Promote industrial development through diversification and regional value chain development, agricultural development and food security; and
- Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
To realise these objects, member states resolved to;
- Progressively eliminate tariffs and non-tariff barriers to trade in goods;
- Progressively liberalise trade in services;
- Cooperate on investment, intellectual property rights and competition policy;
- Cooperate on all trade-related areas;
- Cooperate on customs matters and the implementation of trade facilitation measures;
- Establish a mechanism for the settlement of disputes concerning their rights and obligations; and
- Establish and maintain an institutional framework for the implementation and administration of the AfCFTA.
Status of Ratification of AfCFTA
As already established, the AfCFTA aims at accelerating Intra-African trade and improving Africa’s trade position in the world market.
Article 23 of the AfCFTA, provides that the agreement and the protocols on trade in goods, trade in services, protocol on rules, procedures on settlement of disputes, protocols on investment, intellectual property rights, competition policy and any other instrument within the scope of the agreement shall enter into force 30 days after the deposit of the 22nd instrument of the ratification.
The import of the above is that AfCFTA will come into force 30 days after the 22nd member State has deposited its instrument of ratification.
Fortunately in 2019, the Sahrawi Arab Democratic Republic was the 22nd State to submit its instrument of ratification as a consequence of which the agreement entered into force on the 30th day of May, 2019.
Presently, 54 of African Union member States are signatories to the agreement, of which 43 have deposited their instruments of ratification. 44 States have complied with their domestic requirements for ratification of the AfCFTA
Implications of Ratifying and Domesticating a Treaty
Ratification of a treaty or agreement is an act indicating a State’s willingness to be bound by such agreement. It requires a State employing its internal mechanisms to analyse the content of any binding document and indicate whether it is in the interest of the State to be bound by same.
Domestication of a treaty on the other hand, is the process of enshrining the content of the treaty into the laws of the State to enable the State adjudication machinery have jurisdiction over same.
For instance, in Nigeria Section 12(1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) provides that no treaty between the Federation and other country shall have the force of law except to the extent to which any such treaty has been enacted into law by the National Assembly.
It follows that domestication of a treaty is pertinent to activate the jurisdiction of our local courts.
It is noteworthy that the non-domestication of a treaty does not shift parties obligation(s) pursuant to international law. Any State that appends its signature to this agreement or any treaty under international law is estopped from acting in any manner which will defeat the object of the treaty pending revocation.
Potential Benefits of AfCFTA upon Ratification
AfCFTA aims to create a single market for goods and services to increase trading among African nations and as a result boost intra-African trade.
The UNECA estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated.
The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources.
Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses.
Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
The AfCFTA would be accompanied by additional dynamic benefits, notably, export diversification, durable sustained growth, an enlarged regional market that better attracts FDI, with wider economic space for industrialization and catalytic effects for structural transformation.
It has also been said to potentially increase the size of Africa’s economy to $29 trillion by 2050, as estimated by the United Nations Economic Commission for Africa.
It is worthy of note that despite the potential gains espoused by AfCFTA protagonists, it has occasioned grave concerns for others.
Some of these concerns are as follows;
1. Potential loss of revenue: As we already know, AfCFTA aims to progressively eliminate tariffs and non-tariff barriers to trade in goods. Custom duties contribute about 3.7% of most African states revenue. Although the plan is to “progressively” eliminate these tariffs, the short-term effects may derail state’s revenue goals.
2. Impact on small and medium enterprises (SMEs): It is no news that foreign businesses supply goods and services at lower rates than SMEs. This is majorly because of various tax waivers/holidays granted these foreign companies.
Despite this, the agreement seeks to allow foreign businesses penetrate the local market with insignificant or no tariff constraint.
3. Labour matters: AfCFTA has been projected to annihilate the local market. This will lead to loss livelihoods occasioning dependence on these foreign companies who are notorious for labour law violations.
4. Environmental matters: SMEs in a bid to cut costs may resort to flouting regulations and as such may cause further environmental degradation.
The Role of Lawyers Under the AfCFTA
There is no doubt that Lawyers (within and outside the continent) will be instrumental to the successful implementation of the AfCFTA. Some of these roles include;
1. Compliance And Regulatory Requirements: The legal structure of corporations or business entities carrying on business across one or more African countries vary from the informal to the formal.
These include Micro, Small and Medium sized Enterprises (MSME) which constitute a bulk of these entities, as well as large companies which may decide to incorporate either parent or subsidiaries and as such require the expertise of a lawyer.
Further, continuous compliance with various tax, labour regulations inter alia, require the expertise of lawyers to prevent disputes with regulators.
2. Dispute resolution: Generally, disputes can arise between two or more private, commercial or business entities. It may also include a state or a state agency performing a commercial transaction and acting in a commercial capacity.
The current frameworks for the resolution of such commercial disputes are through
- litigation before national courts;
- mediation; or
In the event of dispute, lawyers are expected to employ their expertise in exploring the appropriate and modern dispute resolution mechanism that will aid the growth of intra-African trade.
3. Benefits for academics and law students
The inception of AfCFTA has without scepticism, created opportunities for the legal community. However, these opportunities are not limited to practicing lawyers. It extends to legal academics and law students. Some these benefits include;
Academic Collaborations and Research
One of AfCFTA’s numerous mandate is the continuous education of state parties to build the capacity required for the implementation of AfCFTA on the continent.
This has necessitated the organisation of training workshops and seminars for staff and state parties. This offers a great avenue for international trade law academics to serve as facilitators for such seminars and trainings.
New academic areas of study relating to the AfCFTA may also be crafted into the curriculum of law faculties globally. This will require experts and academicians with the requisite experience to share their knowledge.
International Law Experience and Exchange Programs
The inception of AfCFTA presents an opportunity for International Law students to witness some of the international dispute settlement mechanisms and undertake internships with the Secretariat.
This presents a learning opportunity in international trade law for law students.
There is no doubt that lawyers are cogent for the successful implementation of the AfCFTA. As a consequence, there is need to familiarise ourselves and be proactive with the global trade trends and debates.
Further, African lawyers must actively participate in continuous legal education, become members of relevant professional bodies i.e Chartered Institute of Arbitrators Nigeria (CIArb), Institute of Chartered Mediators and Conciliators (ICMC); inter alia, and advocate for policy reforms as this will greatly contribute to the ease of doing business not only in Africa but globally.
1. Agreement Establishing the African Continental Free Trade Area pg. 4.
2. “RECs” means the Regional Economic Communities recognised by the African Union, namely, the Arab Maghreb Union (UMA); the Common Market for Eastern and Southern Africa (COMESA); the Community of Sahel-Saharan States (CEN-SAD); the East African Community (EAC); the Economic Community of Central African States (ECCAS); the Economic Community of West African States (ECOWAS); the Intergovernmental Authority on Development (IGAD) and the Southern African Development Community (SADC).
3. Agreement Establishing the African Continental Free Trade Area pg. 5.
4. https://au.int/en/press-releases last assessed 4th July, 2022.
5. https://www.tralac.org/resources/infographic/13795-status-of-afcfta-ratification.html last assessed 4th July, 2022.
7. A treaty is an agreement in written form between states (or international agencies) with capacity to enter same that is intended to establish a relationship governed by International Law. http://legal-dictionary.thefreedictionary.com/treaty assessed 4th July, 2022.
8. In Abacha v Fawehinmi (2000) 6 NWLR (Pt. 660) 228 it was held that an international treaty entered into by the Government of Nigeria does not become binding until enacted into law by the National Assembly. An international treaty has no such force of law as to make its provisions justiciable in our courts.
9. https://knowledge.uneca.org/ATPC/sites/default/files/PDFpublications/qa_cfta_en_230418.pdf last assessed 4th July, 2022.
12. https://www.tralac.org/documents/resources/african-union/2026-fact-sheet-on-the-afcfta-benefits-for-africa-and-nigeria-notn-june-2018-1/file.html assessed last 4th July, 2022.
14. https://www.sme360.ng/2019/06/25/afcfta-becomes-a-reality-benefits-and-disadvantages-for-smes-in-frica/assessed 4th July, 2022. https://www.zawya.com/en/economy/africa/south-africa-collects-107bln-in-taxes-in-2021-22-fiscal-year-revenue-service-inpvg3l8 assessed 4th July, 2022
15. The AfCFTA secretariat is located in Accra, Ghana. https://au-afcfta.org/about/ assessed 4th July, 2022
About the Author
Kenechukwu .N.Olikeze is a commercial lawyer and legal researcher practicing in Lagos, Nigeria.