News From Africa

AfCFTA Starts to Draft the Protocol on Investment

EFA has been invited to the group of experts called by the AfCFTA Secretariat to draft the Investment Protocol. This is intended to guide member states and prevent non-tariff barriers to investment within the free trade area. The meeting will be from 6-9 September. More in our next Newsletter.

Meanwhile, in the great global trade dance, the debate on free trade agreements (FTAs) between African countries and major trading blocks continues with some confusion over where the US policy is leading. The US pushed under President Trump for FTAs to replace the African Growth and Opportunity Act (AGOA) trade deal which provides a wide range of tariff-free or greatly reduced tariffs on selected African exports to the US. Both Morocco and Kenya signed FTAs with the US under Trump but President Biden is keen to support multilateralism in trade. Ironically Kenya is one of the top 5 beneficiaries of the AGOA agreement. It also had the second-highest utilisation rate in 2018 with over 70% of its US exports covered by the programme. The immediate effect of the present delay has been that American firms have frozen investment plans in Kenya due to uncertainty about a new free trade deal between the two countries. At the same time, the AfCFTA is designed to promote intra-African trade at the expense of imports from outside the continent.

Negotiations are now on hold while America works out what to do next. The pause reflects a sense of drift in Africa’s trade relations with the West. One country which is in no doubt of the need for FTAs is the UK which is rushing around trying to sign FTAs with its old colonies– the latest with Ghana. In the past, the developed world granted concessions, such as lower tariffs on African exports, without requiring African countries to reciprocate. Now they are increasingly looking to negotiate two-way agreements which will require the opening up of African markets. The old approach was paternalistic and gave Africans little say. But the new one, handled badly, could put Africa’s own integration – and future –  at risk.