AfCFTA success to be determined by effects of complementary policies

A new policy brief from the Overseas Development Institute (ODI), an independent think tank that conducts research on global challenges, including on trade and investment matters, offers an overview of the current status of negotiations of the African Continental Free Trade Agreement (AfCFTA) and of results achieved so far. The brief notes that the importance of AfCFTA will be determined not only by the change in trade rules that the Agreement currently brings, but also by how this framework will interact with complementary policies and actions to be adopted or in course of adoption, such as those aimed at implementing the WTO Trade Facilitation Agreement (whose provisions, among others, are mirrored by the Annex 4 on Trade Facilitation of the AfCFTA Protocol on Trade in Goods) or at supporting a co-ordinated approach to investment facilitation.

The key message is that AfCFTA policy makers should focus on the finalisation of these complementary actions (as those regarding the promotion of investments and competition policy), as well as on mechanisms aimed at ensuring that these actions will be effectively implemented by the AfCFTA State Parties. In fact, their effective implementation by national governments will be decisive for attracting potential investors in Africa (which, in turn, is an essential factor for promoting the industrialization of the Continent and the much needed transfer of know-how from industrialised countries).

In this regard, the brief mentions the case of some African countries such Ethiopia, where the existing restrictions of foreign investments in some specific sectors will need to be removed in order to be aligned with commitments under the AfCFTA.

On the other hand, the brief also argues that concerted public communications efforts addressed at the national private sector and overseas investor communities need to be put in place by African governments to highlight the benefits of the Agreement.