AfCFTA and Africa’s Economic Recovery & Reconstruction – By Zahir Amien
“Let us be precise: for us, African revolution means the transformation of our present life in the direction of progress. The prerequisite for this is the elimination of foreign economic domination, on which every other type of domination is dependent”. Amilcar Cabral at the 3rd Conference of the African Peoples held in Cairo, March 25-31, 1961l
By Zahir Amien
The Africa Continental Free Trade Area (AfCFTA) is a culmination of Pan Africanism tenets after decades of work to ensure economic integration in Africa. By 2018 there were 54 signatories and trade commenced on 1 January 2021. At the end of March 2022, of the 54 signatories, 41 had ratified. [1]. With AfCFTA now operational, this paper asks whether AfCFTA :
(1 ) Will give expression to the aspiration of a politically, culturally and economically integrated and united Africa laying the basis for Africa’s economic recovery and reconstruction;
(2) Become an effective bulwark against 21st century imperialism in Africa;
(3) Alternatively, will it become another example of neo-liberal free trade on terms of the developed world[i] and within the context of trade liberalisation and hyper-globalisation;
(4) In attempting to answer the above this paper first attempts to broadly describe the historical development, changing form of imperialism, colonialism and neo-colonialism and its effect on the political economy of Africa; and
(5) Linked to these questions, the notion of “free trade,” ‘’developmental regionalism’’ and industrial policy in the development trajectory of all countries that transitioned to being developed countries needs to be critically engaged with in its historical context.
- From Colonialism to Neo-Colonialism – The Anatomy, Form and Metamorphosis of Imperialism in the Post-Colonial Period
Over the past five centuries the economic development of African colonies were built to extract commodities and agricultural products to sustain the Western world’s standard of living. Even today across Africa, the air, road and rail transport infrastructure lead to harbours for commodities and raw materials to be transported back to Europe.
Africa’s economies and infrastructure was deliberately fragmented and geared towards exclusivist and extractive commodity-based economies. As a result. today it is still cheaper to transport raw materials and goods to Europe than it is to transport it across African countries for beneficiation. After the end of the cold war and between 1990 and 2014, as most fast-growing countries in the world diversified their economies, most African countries instead continued to rely on rents from extractive industries only. The result being the share of intra-African trade was only 10% in 1995 and a mere 17% by 2017. [4]
The end of colonialism resulted in a new forms of neo-colonialism and imperialism in Africa based on post independent political, economic and security agreements with former colonisers. The decolonisation process that began in the 1960s resulted only in legal and formal rather than substantive ending of the colonial relationship. In other words, it was a reformulation and reshaping of the imperialist relationship between Africa and the West into a newer form known as neo-colonialism. This neo colonialism was further strengthened through globalisation and neo-liberalism from the late 1970s onwards.
Kwame Nkrumah in his book “Neo-Colonialism: The Last Stage of Imperialism,” published in 1965 summed it up best when he wrote “The essence of neo-colonialism is that the State which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty. In reality it’s economic system and thus its political policy is directed from outside.”
Shortly before independence, while negotiating independence with its colonies, France abolished their parliamentary system and replaced it with a presidential system in which power is centralised in the Head of State. This is because it is easier to coerce, manipulate and control one person i.e. the President than a whole government for purposes of monopolising economies of these colonies. France further ensured that most of its former colonies. particularly in West Africa, were pegged to the French currency.
Until May 2020 this resulted in most paying up to 65% of their foreign exchange reserves into the French Treasury. France still retains the right of first refusal on all natural resources and privileged access to government contracts in most of its former colonies. France, like the United States (USA) and the United Kingdom (UK), still has considerable military presence in Africa to ostensibly protect its economic interests.
A similar pattern has emerged in former Anglophone and Lusophone colonies across Africa. They too built a small local comprador class composed of local tribal royalty, the military, middle class, and business. Similarly, the economies remain mainly rent seeking, exclusivist, extractive and commodity based with former colonisers and the US monopolising the economy, trade, and security.
When leaders and citizens dared to question and or revolt against these relationships they too suffered from political and economic instability. This included the assassination of leaders such as Patrice Lumumba, Amilcar Cabral and Thomas Sankarra amongst others. In addition, they planned and supported coups and political and economic sabotage against leaders and countries that attempted to break free from the neo colonial agreements. Examples include Cote Di Voire, Comores , Madagascar , Algeria amongst many others. It is therefore not surprising that the African post-colonial history has been marred by ethnic and religious conflict, territorial wars, terrorism, religious extremism, piracy, trans-national crime, human trafficking, maritime crime, commodity crimes, dictatorships and coups amongst others.
Between 2015 and 2018, Africa experienced 21 civil wars and by 2019 there were still 15 countries with active armed conflicts in sub-Saharan Africa. [7] This is excluding the numerous internal non state actor conflicts.
- AfCFTA – A building block for continental economic recovery and reconstruction & a bulwark against neo colonialism & imperialism.
Studies by the International Monetary Fund (IMF), United Nations Economic Commission for Africa (UNECA) and others state that AfCFTA has the potential to increase growth, raise welfare and stimulate industrial development on the African continent.[15] According to modelling results by the United Nations Economic Commission for Africa (ECA),[1] AfCFTA is a game changer which should stimulate and increase the value of intra- African exports and trade by between 15% (or $50 billion) and 25 % (or $70 billion), depending on liberalization efforts by 2040. Alternatively, the share of intra-African trade would increase by nearly 40% to over 50%, between 2020 and 2040.[2] ( Brookings Institute)[16].
In addition, the World Bank Report on AfCFTA says, ‘’AfCFTA agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion…’’ Full implementation of AfCFTA could reshape markets and economies across the region and boost output in the services, manufacturing, and natural resources sectors. AfCFTA should enable countries to break into new African markets as they both diversify by export destination and type of goods produced. As the global economy is in turmoil due to the COVID-19 pandemic, creation of the vast AfCFTA regional market is a major opportunity to help African countries’ economic recovery.
- Contextual Considerations, Challenges & Unintended Consequences of Free Trade Area’s
In 1963 the Organisation of African Unity (OAU) asserted a vision of regional integration, however progress remained slow. Robert J. Cummings noted that [8] “From the 1950s to the present, more than 200 organizations have been founded on the continent of Africa for the purpose of fostering regional and sub-regional integration and economic cooperation. The performance record of most of these organizations historically has not been sterling.” [9]
However, regional integration was given substantive meaning and direction with the launch of the Lagos Charter in 1975 and the Lagos Plan of Action in 1980.[10] which was based on the concept of “developmental regionalism and the Abuja Treaty in 1990. This treaty was a bottom-up step-by-step approach to regional integration in Africa with the creation of 8 Regional Economic Communities (RECs) and an African Economic Community by 2028. The treaty envisaged six stages in the process of integration. The first stage was the creation of Free Trade Areas (FTAs) in each region followed by customs unions, common markets and monetary unions. The Eight RECs advanced the process of regional integration within each region.
Besides the inherent challenges of regional integration, most of post-colonial Africa was also hamstrung by unfair independence deals. In most cases these deals asphyxiated the newly independent economies causing numerous other unintended consequences.
In addition, historical efforts after independence by the UN and Bretton Woods Institutions such as the IMF and World Bank to assist with economic integration did not alter the dependent structure of the African economy. Rather, these initial attempts at integration were premised on the patron-client model and was at the core of neo-colonialism in Africa favouring western countries, former colonial masters, and multinational corporations. It perpetuated external dependence and underdevelopment. This in turn increased the triple challenges of poverty, inequality, and unemployment across the continent.
Furthermore, the former Trade and Industry Minister Professor Rob Davies says “Trade negotiations, in short, have been driven by short-term self-interest, reflect power relations and are characterised by relativism. These realities in the era of “globalisation” and “neo-liberalism” contributed to growing unevenness and increasing inequality both within and between countries.” What is required includes amongst others, rebalancing international trade policy with developing countries considering principles of policy space, special and differential treatment, our voice and solidarity.[13]
Against the evidence of economic history, neo-liberalism presented trade liberalisation as good for all regardless of their stage of development. In the heyday of neo-liberalism, “trade” was reduced to import liberalisation and sold as the route to “integration” into the world economy, development and prosperity. Free trade became a proxy for progress and development.
This led to many myths. For example, hundreds of millions of people lifted out of poverty during a period that saw widespread trade liberalisation. More trade liberalisation was touted as the route to raise living standards of more poor people. This myth failed to mention that in a country like China achieved its industrialisation by following a route more akin to protectionism and a deliberate state led industrial policy rather than free trade.
Like other industrialisers before it, China took advantage of export opportunities open to it, while carefully calibrating opening of its own economy. 7 Only recently in the face of threats to close export markets to its products has China become a so- called proponent of “free trade”.
The economist HaJoon Chang argues that all countries that moved from low-income agrarian societies to become “developed countries” passed through a stage of industrialisation. During this stage, all industrialisers without exception protected their emerging industries. Their position in international trade negotiations at that time was to defend the policy space they needed to support domestic industries against calls by stronger economies for market opening.
This was true for amongst others , the US against the demands of Britain in the late nineteenth century, South Korea in the 1970s and China in the 1980s. Only when they later emerged as globally competitive producers did they begin supporting “free trade” while denying others access to the very same ‘’protective’’ policy tools deployed in their own industrialisation process. Poor countries have stayed poor because they have remained trapped in the extractive commodity-based industries exporting primary products – agricultural and/ or mineral only.
Developing countries that have emerged as moderate- or high-income countries have all followed the same path as earlier industrialisers. Their governments intervened to actively promote, nurture and protect their industries. The adoption of “free trade” was never consistent. Free trade was stronger in areas where proponents were competitive than in areas where they were not – notably for many of the current developed countries in agriculture. The Neo-liberal Free Trade perspective also argued for ‘’open regionalism’’ integration in the developing world. This meant regional preferences would need to be accompanied by lowering the region’s average tariff levels towards third parties.
An alternative paradigm to ‘’open regionalism’’ is ‘’development integration’’ which says that ‘’open regionalism’’ is narrow, myopic and Eurocentric. It ignores the fact that in developing regions the major barriers to increasing intra-regional trade are not fundamentally tariff regimes but rather real economic constraints. These include under-developed production structures and inadequate infrastructure. Proponents of “development integration” argue that trade integration needs to be seen as part of a broader integration strategy, which would also need to include cooperation to overcome infrastructure backlogs and explicitly to promote economic diversification, including industrial development.
All countries that have transitioned to developed economies have done so through the adoption of an asymmetrical trade policy with a phased approach to import liberalisation driven and informed by industrial policy. As industries are nurtured and supported in their development, they need to be protected against imports of competing finished goods. When these industries begin to “outgrow” their domestic markets, developmental states need to take advantage of any opportunities available to promote exports.
Noting the above, even though AfCFTA is the most ambitious expression yet of the long journey towards African economic unity and integration, there are inherent challenges, risks and unintended negative consequences if it is not managed carefully.[17] This includes amongst others that the smaller and more vulnerable African states may experience fiscal revenue losses amongst other negative impacts from premature liberalisation and de-industrialisation. Opening of markets must be done incrementally after industrialisation and some protection.
This raises two important questions: How can AfCFTA advance inclusive growth and economic development of the African continent? And how can AfCFTA benefit all African countries?
According to UCT Academic Professor Faizel Ismail these objectives may be achieved if African states adopt a ‘developmental regionalism’ approach to trade integration that includes four pillars. These are:
1) An asymmetrical trade integration policy with a phased approach to import liberalisation driven to cater for the uneven development of countries in the continent;
2) Structural transformation and transformative industrialisation, including creation of regional value chains to build a robust regional market to unlock the continent’s manufacturing potential which is protected against imports of competing finished goods;
3) Cooperation on cross-border infrastructure investment (and trade facilitation); and
4) Cooperation to promote democracy, good governance and peace and security.
- Conclusion: Quo Vadis
Kwame Nkrumah in a speech delivered in 1963 called Africa Must Unite said ‘’ the forces that unite us are intrinsic and greater than the super imposed influences that keep us apart’’.
Developed countries have for the past 500 years used Africa for the extraction of raw materials and as a consumer of imported manufactured products and foreign business services. Africa has been subjected to unequal terms of trade and the external domination of its key extractive industries. Africa has since its political independence continued to remain economically dependent on the West. Therefore, Africa is still unable to negotiate from a position of strength because of historically unfair neo-colonial finance , trade and economic agreements together with current world economic and trade architecture.
Thus, the most significant challenge for Africa in the next few decades will be to transform itself from a largely “dependent outward-oriented” commodity-based exclusivist and extractive rent seeking economy to a more integrated inclusive and diversified economy. It must focus on, amongst others, beneficiation through manufacturing , technology development and the services sector amongst others. This will be done through the assistance of AfCFTA that is underpinned by an integrated regional and intra-continental developmental model. It must also be premised on developing more equitable terms of trade with developed countries.
Noting the above, if AfCFTA does not have functionally coherent trade and investment implementation strategies premised on ‘’developmental regionalism’’ which includes industrialisation and ‘’strategic progressive protectionism’’, it will once again be exploited by both the West and our newer partners of the Middle East and Asia.
However, if AfCFTA is premised on the principles of ‘’developmental regionalism’’, it will represent for the 1st time in post-colonial history, an opportunity for Africa’s economic recovery and reconstruction. It will then be a game changer as it lays the political, economic, cultural, and social foundations for an integrated political, economic trade and investment regime. It will allow us to become more self-reliant but only if we have more inclusive and diversified regional and continental economies with greater focus on the manufacturing and frontier technologies sectors. One of the key lessons that the COVID period has taught us is that we will reduce our vulnerability in the post-Covid period with more inclusivity, solidarity and building regional resilience with greater diversification of production processes. (UNCTAD, 2021). Diversification will also allow us to bridge the digital divide and focus on the rapid development of e-commerce.
Finally, we must also be mindful that the implementation of AfCFTA will not be smooth sailing. Most western countries and former colonisers’ current and future economic and security interests will be threatened by the success of an AfCFTA that is based on ‘’developmental regionalism’’ and ‘’strategic and progressive protectionism’’. The new “Cold War ” between the USA and China as well as Russia is instructive in this regard.
Therefore, we must prepare for and mitigate against an international push back by historical imperial and neo- colonial forces. For AfCFTA’s success, we will need to ensure that we are not bullied into watering it down to become another tool based on neo-liberal concepts and interpretation of ‘’free trade’’ and ‘’open regionalism’’. We will also have to develop an integrated legislative and policy architecture to ensure the free flow of goods, services, and people across the continent premised on developmental regionalism . We will have to build vast inter regional and continental bulk infrastructure projects that includes road, rail, air, and water transport routes that connect our continent. We will need to invest in massive regional and cross cutting continental wide ICT infrastructure and industrialization. We will need to develop systems and the necessary human resource skills for the increase in trade, technology and manufacturing sectors.
The time has come for Africa’s to rise as a formidable force on the global horizon and realise our potential. We must remain vigilant of any attempts to derail AfCFTA; we owe it to our people to ensure Africa’s economic recovery and reconstruction and to bury the final vestiges of imperialism, colonialism and neo-colonialism on the continent.
End Notes
[1] The three countries that have ratified but not yet deposited their ratification are Cameroon, Angola, and Somalia
[2] Free trade” -A system of unrestricted international flows of goods, services and factors of production has always been one of the principals aims of economic liberalism and, since the late 1970s, has been regarded by many as the essence of globalization, UNCTAD, 2021.
[4] Brookings Institute).
[5] Franc Afrique is the term used for the French influence in the former colonies
[6] Ian Taylor a researcher says “The CFA has to go. It is such a ridiculous neo-colonial stunt by the French that it should have gone 60 years ago. The first step is to try to kill CFA, to try to actually move towards true independence for Francophone Africa, which would basically kill Fran Afrique”,
[7] which included: Burkina Faso, Burundi, Cameroon, the Central African Republic (CAR), Chad, the Democratic Republic of the Congo (DRC), Ethiopia, Kenya, Mali, Mozambique, Niger, Nigeria, Somalia, South Sudan, and Sudan. (ACCORD).
[8] R. J. Cummings “Africa’s Case for Economic Integration”
[9] www.HU Archives.net).
[10] The Lagos Charter and Plan of Action was created by the first executive secretary of the Economic Commission of Africa, Adebayo Adedeji.
[11] AfCFTA and Developmental Regionalism – A Handbook – Faizel Ismail
[12] Ibid 9
[13] UNCTAD, 2021)
[14] . The three countries that have ratified but not yet deposited their ratification are Cameroon, Angola, and Somalia
[15] Ibid 8
[16] Brookings Institute – Intra Africa Trade : A path to economic diversification and Inclusion
[17] Ibid 8
[18] Ibid 8
[19] Ibid 9
[20] ITU, 2019).
