According to experts, Africa is at the dawn of a new era with the implementation of the Africa Continental Free Trade Area agreement, the AfCFTA, considered to be the largest project ever carried out in Africa after the independence movement. Signed in 2018 in Kigali, it represents the world’s largest free trade zone by the number of participating countries, with a market of 1.4 billion people. Since its signature, several negotiations have taken place and a good number of protocols have been signed for its effective implementation. It is against this backdrop that, six years on, Kigali welcomed African businessmen to discuss and decide on the options and actions to be taken to speed up the implementation of the AfCFTA.
On March 21, 2018, 44 African heads of state and government, meeting in Kigali, the Rwandan capital city, signed an agreement establishing the African Continental Free Trade Area, the AfCFTA, creating the world’s largest free trade area. An achievement that many did not believe in, but that Africa should be proud of, as Wamkele Mene recalled at the second edition of the AfCFTA Business Forum or Biashara Afrika, held in the Rwandan capital from October 9 to 11, 2024. Since the signing of the AfCFTA in March 2018, 48 countries have ratified the agreement, with negotiations of all protocols successfully concluded, according to its secretary general.
The level of ambition and commitment to achieve this was unprecedented. At the time, our critics were saying that Africans would not sign this agreement, claiming that Africans were not used to concluding what they undertook. But the agreement was signed. President Kagame was the Chairman of the African Union at the time, and the agreement came into force the following year, in 2019, becoming legally binding. It is the fastest instrument to enter into force since the creation of the Organization of African Unity.
Wamkele MENE, Secretary general of the AfCFTA
Significant trade flows have begun, thanks to the AfCFTA guided trade initiative, which was launched in 2022 with seven countries. By 2024, 39 countries had joined the guided trade initiative. This was one of the key announcements at the Biashara Afrika 2024. The Guided Trade Initiative was conceived on the African continent as a provisional solution to launch preferential-tariff trade between interested state parties that meet the minimum requirements to start trading under the AfCFTA.
This initiative is designed to be a catalyst for trade facilitation between the States Parties. This pilot phase was essentially reserved for trade in goods. Its evaluation proved conclusive, and the secretariat intends to pursue the initiative by including services. Nearly forty States Parties have expressed interest in participating.
Mahamadou ISSOUFOU, AfCFTA Champion
With the theme: “Dare to invent the future of the AfCFTA”, the 2024 edition of Biashara Afrika was an excellent opportunity to ask the right questions, in particular about how to better involve the private sector in its implementation. One of the key points of this implementation is the creation of regional value chains to support and accelerate intra-African trade. Within the framework of regional value chains, a number of key sectors have been identified as priorities that should drive the African economy over the next 10 to 20 years. The automotive sector, even if it faces enormous challenges, is among the most promising if automotive policies are adopted and implemented by African countries. By 2035, Africa is expected to produce between 4 and 5 million vehicles, compared with 1.1 million in 2022.
The African Automobile Manufacturers Association is a powerful driver or advisor if countries are interested in these automotive policies to overcome used vehicle challenges, to implement trade-related investment mechanisms for car manufacturing, for suppliers to come in and implement vehicle asset financing to solve affordability issues. Logistics is certainly one of them. To be able one day to transport cars, like manufactured cars, from Egypt to South Africa, there’s still a long way to go. And I’m glad that logistics and transport are also among the key areas of the African Continental Free Trade Agreement. But it’s not just about our industry, I think many industries are facing this challenge.
Martina Biene, President of the African Association of Automotive Manufacturers (AAAM)
Another sector is attracting particular attention from the AfCFTA secretariat and the African Union as one of the most promising, and therefore a priority, for investment. This is the vaccine and medicines manufacturing on the continent. According to the WHO, Africa imports over 98% of what it consumes in terms of vaccines, but by 2023 the Africa CDC has drawn up a clear map of the continent’s production capacity, with a target to manufacture 60% of vaccine requirements by 2040. A sizable challenge, but not impossible to meet, according to Africa CDC’s Director General.
People who want to doubt that, let me just give you a figure. Look at a country like Switzerland with a population of 8.3 million. The pharmaceutical sector accounted for the largest share of Switzerland’s exports in 2023, with almost 37.5% of all exports. This generated around 120 billion US dollars, which represents 7% of Switzerland’s GDP. So, when we transplant this sector to Africa, a market of 1.4 billion people, you’ll see that we have a very promising sector. I’m very sure, and I say this with a great deal of confidence, that investing in the manufacture of medicines, vaccines and other healthcare commodities in Africa is a safe investment, one that guarantees our health security, economic growth and job creation, and it’s important to remind that in Switzerland there are 135,000 people working in the pharmaceutical sector. So, we can have millions of jobs created and indirect jobs that will come and you’ll see that it will become what we call a game changer. And so, for me, pharmaceutical manufacturing is Africa’s second independence.
Jean Kaseya, Director General, Africa CDC
In order to increase the local production of goods and services on the African continent, and to enable countries to make the most of the benefits of the AfCFTA, the challenge of SMEs financing must be addressed. This crucial issue was also discussed at the Biashara Afrika 2024, with a call for banks to find innovative formulas to address this challenge. According to the IMF, more than half of the 40 million SMEs identified in sub-Saharan Africa have no access to credit. Yet SMEs account for over 90% of the continent’s businesses and 60% of its workforce.
The big game-changer across both of these areas will continue to be information technology, digitization, and of course these days we have a very strong development of AI on top of normal digitization and we expect that to make it much easier for businesses, financial institutions to reach out to small entities, SMEs, and serve them using different business models as we’ve seen successfully in a number of environments in East and West Africa where you’ve essentially heard this intermediation of human beings using digital technologies, digital platforms to bring on board customers, serve them, process them much more efficiently and at low cost. So, I think the future of cross-border trade finance, particularly for SMEs, will be greatly enhanced by the development of ongoing technology and related new business models, but regulation will of course remain essential and I think that’s where ZLECAf has a lot to do in terms of holding up a mirror to African national regulators and encouraging them to relax some of these regulations.
Admassu Tadesse, TDB Group President and Managing Director
Another crucial issue is the movement of Africans within their own continent as the African Union notes the slowness of States in adopting the Protocol on Free Movement.
The question remains: how easy is it for our wafanya biashara or the traders we are talking about, to move across borders? The African Union Protocol on free movement of persons was also signed here; a twin instrument to the AfCFTA but it has not gained the same momentum. Though 33 member states have signed the protocol today, about 27 here in Kigali in 2018, only four have ratified it, which is less than 15 we need for the protocol to enter into force
Monique NSANZABAGANWA, Vice-president of the African Union Commission
According to Rwandan President Paul Kagame, it’s all a question of political will to improve the movement of people on the continent. Rwanda is one of four countries to have ratified the protocol on the free movement of people in Africa.
Indeed, Africa is capable of coming together to solve our own problems. Of course, I want to urge our leaders to make sure that some of the things that stand in our way, and which aren’t actually too difficult to address, should not continue to be the case. We need to fix our politics and our governance. And it all begins with mindset and clarity of vision.
Paul KAGAME, President of the Republic of Rwanda
The AfCFTA, one of the major projects of the African Union’s Agenda 2063 “The Africa We Want”, is intended to be inclusive, leaving no one behind, including SMEs; but also women and young people, who make up more than half the continent’s population. Some players believe that digital payments could represent an opportunity in this context.
The Protocol on Digital Trade aims to harmonize these regulations for these merchant payments work. There is a big focus on remittances and it’s diluted, the urgency for merchant payments is what happens every day and trade is done every day and we need them to work. So regulation plays an important role, but moving from cash to merchant codes as a payment method would be the most responsible way for us to make these payments work. But first, merchants must have well-functioning cell phones, they must have the necessary connectivity, and the provider’s quality of service must be perfect. How can we make these payments interoperable so that payment providers compete solely on service quality and cost? I think that’s the job of the regulators, and I’d be happy to learn from them what it will take for us to get there.
Nshuti MBABAZI, Managing Director, Better than Cash Alliance
Apart from the conference side of Biashara Afrika 2024, there were also exhibitors from a number of African countries, including young entrepreneurs and women who say they are ready to seize the opportunities offered by the AfCFTA. Some highlights of the single market project include the fact that it could help lift over 30 million Africans out of extreme poverty. It is also expected to boost African incomes by US$450 billion by 2035, representing 7% of African income growth.
