From Tariffs to Free Trade

The Historic Nature of the Africa Continental Free Trade Area (AfCFTA) & Its Role in Africa's Economic Transformation

Donald Trump called ‘tariffs’ the most beautiful word in the world. That’s so disrespectful to Kakorrhaphiophobia, Dactylioglyph, zugzwang, discombobulation…but I digress.

Still, it brought to mind another beautiful word–free trade– and the genius of the African Continental Free Trade Agreement (AfCFTA). But before jumping into that, here is a video from the Unlearn16 TikTok account that clearly and concisely explains tariffs. 

Sure, the context is the US and what it means if Trump wins and implements the 60% tariff on Chinese goods, but it also clarifies that businesses importing goods into the country bear the weight of tariffs. 

Watch👇🏽

Did you catch that? When tariffs go up, businesses will push the additional cost to consumers, and if that is not feasible, they will stop importing goods from that country. That is what has been happening in Africa for a long time.

African countries imposed such high tariffs on each other that businesses in various African countries could not afford to import and export goods to each other. It was so bad that some goods from Tunisia and Cameroon found their way to French warehouses before being redirected back to the continent.

Elsewhere, although Senegal surrounds Gambia, Senegal traded more with France, and the Gambia traded more with the UK.

That’s because Senegal had signed agreements with France to lower tariffs, and the Gambia had done the same with the UK.

The same thing applied to Tunisia and Cameroon. It was more affordable to send goods to France first instead of exporting them directly to each other or other African countries.

The trend of Africa trading more with countries outside the continent continued for years to the continent's detriment.

Developed countries like the UK and France primarily imported raw materials from Africa. This heavy reliance on exporting raw materials prevented African nations from industrializing. 

Industrialization occurs when an economy begins to rely more on manufacturing. It demands that a country or continent use its raw materials to manufacture goods that can be exported to various markets. Industrialization drives economic growth because manufactured goods are more valuable than raw materials. 

Think about jewels. Gold earrings, chains, and rings are more valuable than gold in its raw form. That process of transforming the raw gold into jewels adds value.

Unfortunately, the unbalanced trade dynamic ensured that Africa continued to sell gold for cheap and buy the jewels dearly. That was until March 21, 2018, when African heads of state signed the African Continental Free Trade Agreement in Kigali, Rwanda, after much negotiation. 

The agreement committed African countries to gradually eliminate tariffs on 90% of goods traded between participating countries. Sixty years after the first African country gained independence, African countries finally had a path that allowed them to trade more with each other.

That’s what makes the AfCFTA historic. It was an acknowledgement by all 54 heads of state that it was time to focus more on what binds African countries together rather than what divides them. 

Yes, a lot of countries do not speak the same language. Yes, hostilities keep cropping up between neighboring countries (cue Niger, Mali, and Burkina Faso pulling back from the Economic Cooperation of West African States–ECOWAS). 

Yes, countries have varying foreign policies, with some choosing to focus on joining BRICS and its developing new payment system instead of focusing on the Pan-African Payment and Settlement System (PAPSS).

PAPSS is a financial market infrastructure that enables instant, cross-border payments in local currencies between African markets. 

–Access Bank

Still, there is a path to increased intra-African trade, and that’s what matters. The AfCFTA document has been signed and ratified and is being implemented. 

If a business is currently exporting goods exempt from tariffs, it can continue to do so to other African countries without incurring additional import duties.

Socrates said,

"The secret of change is to focus all of your energy not on fighting the old but on building the new."

Nothing can be done about the old mode of doing things or about the African countries that would rather cling to that than build the new.

However, all the energy going into implementing the AfCFTA will eventually create a new order—one where intra-African trade reigns supreme.

And then, as Ngugi wa Thiong’o said, the reckoning will begin.

“The real reckoning of Africa’s colonial past is when African countries can control their resources and make things with their raw materials, then exchange with the west and any other country based on equal give and take.”

Thank you for reading Africa: Not an Afterthought, a newsletter that leads the conversation on how Africa can leverage technology, trade (AfCFTA), regional integration, and pan-Africanism to build a continent that is no longer an afterthought.

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