AfCFTA and Tariffs

The African Continental Free Trade Area (AfCFTA) Association of Commodity Exchanges annual conference was held at Victoria Falls this week.The theme for the conference was described as "Scaling Intra-Africa Trade: Leveraging Commodity Exchanges for Economic Resilience and Growth."

Launched in January 2021, the AfCFTA aims to reduce all tariffs on trade between member countries, ultimately creating a single continental market for goods and services. Currently, 44 out of 55 African Union member states have ratified the agreement, and many countries are actively implementing its protocols. Once in full operation, the AfCFTA is expected to significantly boost trade, economic growth, and job creation across the continent.

Recent developments within the free trade area include the establishment of a digital trade platform to facilitate transactions, and the ongoing discussions about rules of origin, which are crucial for determining local content in traded goods. Furthermore, efforts to harmonise trade regulations and standards are underway, aimed at minimising non-tariff barriers that can hinder trade.

However, the implementation of AfCFTA still faces significant challenges. Infrastructure deficits, bureaucratic inefficiencies, and political instability in some member countries continue to impede progress. Additionally, the COVID-19 pandemic has exacerbated existing trade vulnerabilities, highlighting the need for more resilient supply chains and enhanced cooperation among African nations.

Looking ahead to 2025, former President Donald Trump's proposed tariff policies are expected to significantly impact global trade dynamics, including those under the AfCFTA framework. If the U.S. were to impose new tariffs on all trading countries, it will lead to increased costs for African exports to the U.S. market. This certainly would diminish the competitiveness of African goods, particularly for those countries heavily reliant on exports to the U.S.

Trump's tariff proposals will definitely encourage African nations to further strengthen intra-African trade within the AfCFTA. With the potential for reduced access to the US market, African countries will be forced to diversify their trade partnerships and focus on enhancing economic ties within the continent. This shift could accelerate the implementation of the AfCFTA and stimulate regional supply chains, as nations look to rely more on one another for trade.

In conclusion, while the AfCFTA is making strides towards achieving its goals of economic integration and trade enhancement, external factors such as Trump's tariff proposals in 2025 could pose challenges. However, these challenges may well serve as a catalyst for deeper intra-African collaboration, ultimately reinforcing the significance of AfCFTA as a driver of economic growth and resilience across the continent.