How good governance can drive AfCFTA forward

International Trade is the bedrock of human progress, and a country cannot lead or stay with the tide of progress if it closes its doors to its neighbors. This unfortunately has been the case with countries within the African continent, which have traditionally imposed more restrictive trade measures on other African countries, preferring to trade with non-African countries.


In fact, in 2019 for example, approximately 14.4% of official African exports went to other African countries, a small fraction compared with the 52% in intra-Asian trade, and 73% between European nations in the same year. Fortunately, with the African Continental Free Trade Area (AfCFTA) becoming operational on 1 January 2021, and effectively also becoming the largest free trade area in the world, that trend will likely change with more integrated African economies.

Although AfCFTA does not go as far as to create a common market or customs union like the European Union (EU) and is not as comprehensive as either the US-Mexico-Canada-Agreement (USMCA) or the Regional Comprehensive Economic Partnership (RCEP), it is, however, a major step in those directions and would create significant benefits for any African government with a demonstrated practice of good governance.

Good governance creates real benefits
The benefits to a country that adheres to good governance are not only real but also measurable. Though the concept of good governance is oftentimes difficult to define, there are certain characteristics that accurately capture its essence.

Whereas the actions that governments take to manage their affairs are called governance, which is often defined as “the process of decision-making and the process by which decisions are implemented”, good governance is embodied for example, in the control of corruption and the design and implementation of effective regulatory policies, significantly improves the ability of people to participate in and benefit from economic growth. Thus, at the centre of good governance, and arguably its most critical component, are people. Governments and strong institutions need competent people to make good policies and implement them; they are as such the means to accomplish good governance.

It naturally follows that African governments that effectively invest in their most important resource – their people – will benefit most from a more integrated trade arrangement under AfCFTA. There are countless examples from other multilateral regional agreements where this assumption has held true. The most salient example is the now-rebranded USMCA, which was formally known as the North American Free Trade Agreement (NAFTA).


Investment in human capital drives economic growth
Although it is generally understood, based on a 2017 report by US Congressional Research Services that the Agreement more than tripled trade between Canada, Mexico, and the US, these economic benefits were not limited to corporate interest alone, but also extended to various aspects of the public interest. Whilst this increase in economic benefits was due to several factors, chief among them was a significant investment in human capital among the member states….read full article


Developing human capital is key for Africa
The issue of a “development divide” has similarly been raised as a major obstacle to integration under AfCFTA given the gap in GDP between African giants like Nigeria and South Africa and other least developing economies in the continent. As with the ASEAN model, these obstacles can be overcome with policies tailored to develop human capital.

The successes of the ASEAN model provide a welcome hope that such policies would likely be successful under AfCFTA if implemented with the same enthusiasm and vigour as implemented under the ASEAN project, as the African continent is endowed with an abundance of natural resources compared with ASEAN countries…read full article


Placing people first
Although AfCFTA arrived rather late compared to other regional free trade agreements, it nonetheless comes at a critical time. With the US relinquishing its dominant role in international trade since World War II; the disruption to global trade caused in large part and or accelerated by the Covid-19 pandemic; the disruption to the global economy caused by current trade conflict between the US and China;… read full article




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