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The author is Secretary General of the African Continental Free Trade Area
Misinformation may have sparked Britain’s anti-immigration riots, but fear of illegal immigration is by no means limited to Britain. Under pressure from voters, governments across Europe are desperately searching for solutions. Conversely, African governments are worried about the exodus of educated people and entrepreneurs – the dreaded brain drain that is hampering development. Yet many of those leaving would, if given the choice, prefer to stay at home, anchored in the ties of family, culture and community. Economic circumstances are contrary to this modest wish.
The new UK Labour government has recognised this reality and pledged £84 million for projects in Africa and the Middle East to tackle the root causes of displacement. While the funds are welcome, they will not deliver the economic transformation Africa needs to tackle the root cause of migration: the lack of jobs and opportunities.
Real transformation depends on the launch of the African Continental Free Trade Area (AfCFTA) – a groundbreaking agreement that brings together 54 countries and some 1.47 billion people to form the world’s largest free trade area. Although Africa’s trade is increasing, it trades less with itself than any other continent – changing this situation will be critical for African prosperity.
What the continent sends to the rest of the world binds it in one-sided trade relations. As a legacy of the colonial era, Africa’s exports are dominated by commodities such as coffee beans, cocoa and raw minerals, leaving the country vulnerable to the vicissitudes of global commodity markets. Outside the continent, this commodity is enhanced through refining, processing and manufacturing. Finished goods are then imported back into Africa, thwarting the continent’s ambitions to become an economic powerhouse.
However, when African countries trade with each other, processed and manufactured goods account for more than 42 percent of their trade. The AfCFTA will eliminate tariffs on 97 percent of all tradable products within the bloc, dramatically reducing trade costs to boost trade volumes. Instead of exporting jobs abroad, Africa will thus enable labor-intensive industrialization across the continent.
The World Bank’s forecasts shed light on the AfCFTA plan. The initiative is intended to lift 50 million people out of extreme poverty, increase incomes on the continent and boost intra-African trade. At the same time, investment on the continent could increase by up to 159 percent. A huge integrated market casts a wider net for global capital, reduces the risk of investing in individual countries and enables economies of scale.
To achieve this ambitious project, international allies are essential. In 2021, the UK became the first country outside Africa to sign a Memorandum of Understanding to Promote Trade with the AfCFTA, committing funds and providing trade policy expertise to support implementation. It is vital that the new Labour government continues this work. Not only will it open up markets and investment opportunities for British companies on the continent, but it will also provide a coordinated approach to comprehensively tackle irregular migration.
More allies are needed. Although the AfCFTA offers the best hope for African prosperity, there are still significant hurdles to overcome in its implementation. Technical challenges remain in simplifying regulatory systems and digitizing customs procedures. Significant investment is needed to produce African-made products that create good jobs on the continent.
In particular, the continent’s fragmented transport and logistics networks need investment. Freight railways mainly transport goods from inland to coastal ports, neglecting regional needs. Greater international cooperation is needed. The partnership between British International Investment, the UK’s development finance institution, and Emirati logistics company DP World to support the modernisation and expansion of ports and inland logistics across Africa is a step in the right direction. But the continent still faces an infrastructure finance gap of about $100 billion a year.
But despite formidable challenges, the AfCFTA is making progress. Launched in 2018, the agreement’s implementation was delayed due to the pandemic and the impact of the war in Ukraine. Nevertheless, in October 2022, the first shipments under the AfCFTA agreement took place: Kenya and Rwanda exported batteries, tea and coffee to Ghana. These countries, along with six others, formed a pilot project to test the agreement and identify necessary adjustments. This year, it was expanded to include another 39 countries, including South Africa and Nigeria, which exported refrigerators, bags, ceramics, textiles, cables, smart cards, slag, black soap, native starch and shea butter.
Deep and comprehensive integration will take time. But without structural economic change in Africa, the number of migrants to the West will increase. There is only one long-term solution to this challenge. It is better to start working now.
