Lauded as the key to Africa’s economic fortunes, the African Continental Free Trade Area (AfCFTA) has been met with much excitement. Indeed, this area holds great economic promise for the continent but there are some glaring gaps that require consideration – particularly from a social dimension. Established in 2018 by the African Continental Free Trade Agreement, AfCFTA entails the creation of a consolidated marketplace for goods and services throughout the African continent. 



According to a 2022 World Bank report, this agreement could generate vast economic benefits, embracing 1.3 billion people and a combined GDP of $3.4 trillion. If fully implemented, the agreement is expected to increase income by 9% by 2035 and help uplift 50 million individuals from extreme poverty. It aims to boost intra-African trade, promote industrialization, foster economic diversification, and ultimately lead to increased economic growth and job creation. As the agreement outlines, this integration will be strengthened and underpinned by allowing the free movement of individuals across the continent.



Yet, there has been little consideration of the impact of this movement on social security, an important policy tool that addresses socio-economic challenges, contributes to long-term development, and promotes a more equitable and resilient society. 



In Africa, particularly, its impact cannot be overlooked.



Without the necessary safeguards in place, the AfCFTA exists as nothing more than a romantic ideal. Intra-African migration has increased by 30% in the last decade and is on an upward trajectory. However, existing systems may find themselves under strain as demographics shift and the demand for services and support transcends traditional geographical boundaries under AfCFTA. As it stands with current policies, African migrant workers and their families may lose their social security benefits when they return to their home nations because these benefits are often limited to specific territories. 



Compounding these concerns is the limited scope of social security coverage on the continent. According to the International Labour Organization’s (ILO) World Social Protection Report, only 17.4% of the population in Africa receives at least one social protection benefit compared to 46.9% globally. This low level of access to social protection is attributed to the labor market structure on the continent and limited domestic resources allocated to social protection. As AfCFTA takes hold, there is a need for social security coordination to expand social protection coverage, especially for migrant workers and their families.



There are some considerations. First, it should guarantee the equal treatment of all workers in order to prevent unfair discrimination against migrant workers. Second, it must consider all elements of a worker’s career to ensure comprehensive insurance coverage and the determination of benefits. Third, there should be a recognition that residency, employment, or economic activity in one state allows for the acquired rights and benefits to be upheld in another state. 



Fourth, the applicable laws should be established to prevent double benefits or double obligation to contribute towards a social security scheme. Fifth, these efforts must make social security benefits transferable or exportable by reducing restrictions on the payment of benefits and receipt of services when workers reside in a different country. In this regard, African countries should adopt crucial policy measures to develop the social dimension of this area by ratifying and implementing the existing ILO conventions and recommendations regarding migration and social security. 



The equality of treatment, among other principles and standards, should be incorporated into domestic law. Moreover, African countries must also conclude social security agreements to coordinate and ensure the portability of social security rights and benefits. In this regard, bilateral labor arrangements or Memorandums of Understanding (MoU) should include social security provisions. Additionally, unilateral measures developed by sending and receiving countries must be taken, such as the inclusion of national social protection floors. Beyond social security, the social dimension should include initiatives that address practical obstacles to the AfCFTA, such as language barriers, xenophobia, exorbitant cross-border remittance fees, and lack of information and awareness.



As researcher and postdoctoral fellow Balkissa Diallo argues, “For the true elimination of trade barriers, AfCFTA efforts must embed the facilitation of African migration into their structures — and also consider existing dynamics that prevent this from happening.”



If AfCFTA has any real hope of succeeding, it must also integrate with society beyond the economic policies and trade agreements.

Safaricom Plc Headquarters and Kiosks Ahead of Earnings

Developing Further The Social Dimension Of The African Continental Free Trade Area

The African Continental Free Trade Area (AfCFTA) has been touted as the key to unlocking the continent’s economic fortunes. Yet, in a continent that grapples with extreme poverty and inequality, what does this tangibly mean?



AfCFTA, an Africa-wide free trade area agreement aimed at establishing the African market as a single market, was formed by 54 of the 55 African Union (AU) nations in 2018. This year has been seen as the year of accelerated implementation of the agreement. As Ijeoma Uju, a Partner at Templars Nigeria, outlines: “Recent developments across the African continent show that the idea of ‘Africa Rising’ remains true and alive. With trade liberalization through AfCFTA, a fast-growing population and increased technology penetration, the opportunities in Africa’s key markets continue to expand. What many see as challenges in Africa, are in a manner of speaking, Africa’s greatest strength for investments and growth.”



The agreement represents not just an economic opportunity but a transformative force that can reshape Africa’s global standing. By fostering collaboration and integration among nations, it encourages shared knowledge and resources while strengthening regional ties. It is envisioned as a way to drive innovation, which could lead to the development of sustainable industries and solutions to pressing social challenges.



According to a 2022 World Bank report, this agreement could generate vast economic benefits, embracing 1.3 billion people and a combined GDP of $3.4 trillion. If fully implemented, it is expected to raise income by 9% by 2035 and lift 50 million people out of extreme poverty. It aims to boost intra-African trade, promote industrialization, foster economic diversification, and ultimately lead to increased economic growth and job creation. However, as the bank states, to realize these benefits, the agreement must harmonize policies across regions and interests.



Abrego et al. outline the potential for Africa’s welfare advancement, particularly through reducing Non-Tariff Barriers (NTBs) with an emphasis on manufacturing and agriculture for income gains. Their research indicates that addressing NTBs, including infrastructure gaps, improving business environments, and reducing transportation costs, is crucial for maximizing these gains. From a policy point of view, the authors call for a reduction of NTBs, an enabling business environment, full liberalization to maximize the welfare benefits, and structural transformation that promotes labor and capital reallocation. Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), asserts: “Unless we can deal with these costs and bring them down, it will be very difficult for us to actualize a good implementation of the Continental Free Trade Area.”



There are, of course, some other glaring challenges to consider in implementing this agreement. Firstly, AfCFTA’s benefits might not be evenly distributed, potentially exacerbating income inequality. Those with skills and resources might benefit more, leaving vulnerable populations behind.



Secondly, many nations on the continent lack robust social safety nets. If increased trade leads to job displacements in certain sectors, there might be a lack of adequate social security measures to support affected individuals and families. Thirdly, rapid industrialization and increased trade could raise concerns about labor standards and workers’ rights. Ensuring fair wages, safe working conditions, and job security are crucial for social security, but these may be compromised in the pursuit of competitiveness.



Finally, a significant portion of Africa’s workforce operates in the informal sector without formal social security benefits. Integrating these workers into formal economic activities under AfCFTA poses challenges in ensuring their social security.



Indeed, while AfCFTA has the potential to drive economic growth and create jobs, its impact on social security in Africa will depend on how well governments address the challenges highlighted. Policymakers need to focus on inclusive economic policies, invest in education and skills development, and strengthen social safety nets



to ensure that the benefits of increased trade translate into improved social security for all segments of the population. As those in the ‘Africa Rising’ camp argue, this could be a watershed moment for the continent.



AfCFTA holds immense promise for Africa’s economic growth, but its true success will be measured by our ability to address these challenges and ensure inclusive development. We may well be able to resuscitate the ‘Africa Rising’ narrative, but we need to balance its impact with policy.

Container ship in export and import business and logistics. Shipping cargo to harbor by crane. Water transport International. Aerial view and top view

The Potential Impact Of AfCFTA On Social Security And Inclusive Development

Wandia Gichuru cannot wait for the day that AfCFTA becomes a reality, especially in the textiles and fashion space.



Most people start young. But while in her 40s, Wandia Gichuru’s journey into entrepreneurship was serendipitous and unexpected. Creating a truly Kenyan fashion brand, she now epitomizes a new generation of fearless entrepreneurs in the East African nation.



Before venturing into the fashion world, Gichuru spent over 15 years as an international development advisor, working for the government of the United Kingdom, the United Nations and the World Bank. But she always knew that she wanted to make a difference back home.



Into fitness in a big way and also a salsa dancer, she set up Vivo Activewear with a friend, Anne-Marie Burugu, in Nairobi in 2011, with a vision to create a Made in Kenya brand catering to women embracing wellness as a lifestyle. She went on to also set up an e-commerce platform onboarding Made in Kenya beauty and fashion brands.



From a single store in Nairobi, Vivo Activewear grew to include Vivo Woman, Safari and Zoya, curated to resonate with the contemporary African renowned for fusing style, comfort, functionality, and affordability.



“Our vision at Vivo Fashion Group is to see Africa dress herself, as well as Africa dress the world. We believe that in addition to being great producers and ardent consumers of fashion, the time has come that we are also creators of strong African fashion brands,” says Gichuru.



The fashion label recently joined the&nbsp;Nairobi Securities&nbsp;Exchange’s Ibuka incubation and acceleration program.



“We want as many people as possible to join us on this journey. So, listing on the Nairobi Securities Exchange would be one way to do this, by allowing anyone who wishes to become a shareholder of the group.”



Expanding its footprint across East Africa and beyond is a pivotal component of Vivo&#8217;s strategy. Unlike merely exporting Kenyan styles, the approach involves tailoring offerings to suit each unique market it enters.



Gichuru emphasizes the importance of establishing partnerships with creators, designers, suppliers, and manufacturers in these regions, thus nurturing the industry ecosystem.



“Over 200 million East Africans get up and get dressed every day. It is hard to get accurate data, but in our estimation, less than 5% of East Africans wear any clothes that were produced in East Africa. So, the opportunities in the fashion sector are huge, and we are only scratching the surface,” says Gichuru.



As Africa prepares for a single trading bloc under the African Continental Free Trade Area (AfCFTA), Gichuru says this presents an exciting opportunity, especially in the textiles and fashion sector. She envisions the removal of barriers that currently impede sourcing and distribution across African countries, potentially opening doors to new African brands entering the Kenyan market.



“We cannot wait for the day that AfCFTA becomes a reality, especially in the textiles and fashion space. This will open doors for everyone in the sector in such powerful ways. We are desperate, for example, to make clothing using Kitenge fabric from Ghana. However, under the current tax environment, we would have to pay 50% duty on Ghanaian fabric, which makes it impossible to create a competitively priced product from it.”



For entrepreneurs like Gichuru, this impending reality holds the promise of uncharted growth. However, alongside this anticipation come the pressing concerns regarding the key challenges that must be addressed to facilitate the scaling of businesses like hers on the African stage.



“Hopefully, AfCFTA will address these kinds of challenges and we will be able to start sourcing from and distributing to countries across Africa. And vice versa, we will see all kinds of African brands enter the Kenyan market,” she says.



Gichuru’s venture, Shop Zetu, is also making strides in Kenya’s fast-growing e-commerce space. The platform is a one-stop shop for all things fashion, beauty, and accessories.



Her current focus is the East African and COMESA markets, where products can be more efficiently moved to and from Kenya.



The Vivo Fashion Group also places strong emphasis on diversity and inclusion. Over 70% of its 450 employees are women. Gichuru is also keen on promoting female entrepreneurs.



“Women in particular are sometimes afraid to come across as too ambitious or too confident. Which can work against us, especially when trying to raise capital. We must be clear about our goals and learn how to articulate them in a way that convinces people that we know where we are going, we know how to get there, and that they should join us on the journey.”



She advises aspiring entrepreneurs to be true to themselves and not let perfectionism or fear hinder their ambitions. She also emphasizes the importance of action.



“I have an incredibly strong bias for action. The advice I mostly give to younger entrepreneurs is to just get started! Don’t let ideas just sit in your head. Start! Execute! Put something in front of potential customers and get a reaction. You’ll either make a sale or you’ll get some feedback – or hopefully both. But it will get you one step further on your way to building a real business”.



As Kenya celebrates 60 years of independence, Gichuru believes that determination and resilience are central to keeping the country’s entrepreneurial spirit alive.



“We have a way of picking ourselves up and keeping ourselves going. And we are also lucky that we live in such a beautiful country, and have a great sense of humor – so no matter how difficult things are, the sun will still be bright and shining, and someone next to you is going to crack a joke and make you laugh!

Wandia Gichuru; image supplied

‘To See Africa Dress The World’: A Kenyan Fashion Entrepreneur On The Industry’s Promising Future  

The largest free trade area in the world, with a combined GDP of $3.3 trillion, came into effect on the first day of 2021. A look at what exactly implementation of a deal of this magnitude means.



By Paula Slier and Sasha Star



AFRICA’S TRADE RELATIONSHIPS HAVE BEEN irreversibly affected by three events – the Covid-19 pandemic and two important trade agreements.



At midnight on 31 January 2020, the withdrawal of the United Kingdom (UK) from the European Union (EU) officially came into force. The decision – Brexit – made by 52% of the British population resulted in the EU losing its second-largest economy and the Union Jack isolating itself in terms of trade, effectively quarantining in its own home. But for Africa, the move holds opportunities. Untapped export potential to the UK is large as is untapped UK export to Africa; the latter is worth more than $8 billion.



Yet, it is the new trade agreement implemented in Africa where interest should really be directed; 54 of the 55 African Union states on the continent have signed up for the African Continental Free Trade Area agreement (AfCFTA) which came into effect on the first day of 2021. Eritrea is the only country that chose to sit out – and there are various explanations as to why not unconnected to power and politics.



By creating the largest free trade area in the world, 1.3 billion people are now set to benefit from the elimination of tariffs on most goods, the liberalization trade of key services and the address of non-tariff obstacles to intraregional trade. The AfCFTA is estimated to bring Africa annual income gains of more than $130 billion per year.



The deal could not have come at a better time, though this was hardly factored in when the agreement was originally brokered in March 2018. Covid-19 has substantially impacted Africa’s tourism sector that accounts for much of its revenue— particularly for smaller nations — while the trade of goods, oil, and even food has also declined significantly as a result of the novel coronavirus.



“The pandemic has presented a historic opportunity to build a better future,” says the African Department of the International Monetary Fund (IMF). It stresses that “trade integration, along with domestic reforms to improve revenue mobilization, digitalization, competition, social safety nets, and climate-change mitigation, will be critical for the region’s resilience, growth and job creation”.



An extensive reduction of tariffs is the first step towards this. With 90% of taxed intraregional trade flows being contracted under the AfCFTA, current flows are due to increase by around 16%, or $16 billion.



“The AfCFTA, if implemented as laid out in papers, would usher an economic progression that would make China’s remarkable economic transformation look basic,” claims Ibrahim Anoba, the Managing Editor of AfricanLiberty.org.



“We’re talking about a continent with a consumer market as large as China but with a superior mineral and natural resources concentration.” The potential of the AfCFTA is enormous, but, as Anoba points out, this all depends on the players in the game. “The different thing about the AfCFTA is that it would take an absolute commitment from as many signatory states as possible to be efficient,” he says. “The first phase is the conceiving of the idea. The second is implementation; proper implementation. This is where we’re at. We cannot move further unless we do this right.”



What exactly does implementation of a deal of this magnitude mean, though?



With so many players involved, it is understandable that the AfCFTA will be enforced in stages. The instruments that are already operational include the regulations and administrative rulings applied by governments to determine the source of goods, services and investments known as the rules of origin; the monitoring and elimination of non-tariff barriers; as well as the schedule of tariff concessions and other specific commitments.



“Long term, the AfCFTA faces a Brexit type of threat from the larger economies which may feel like they are giving up too much autonomy by being part of the agreement,” warns Jamie Mighti, a South Africa-based political analyst. “This risk is higher in Africa than in the European Union because of increased economic disparities between states and Afrophobic attitudes.” Mighti believes that there are substantial levels of antipathy to the business presence of Africans from other states in the large African economies and that this could present a massive challenge to the success of the AfCFTA.



It is not all doom and gloom, however. Mighti is of the opinion that better inclusion of the youth on the continent is an excellent way to ensure that the agreement will thrive, and that more focus should be placed on aiding small and medium-sized businesses, as opposed to large entities. The IMF also feels that tariff reductions should be complemented by policies to reduce non-tariff bottlenecks to trade, and that agriculture-based and less diversified countries should combine trade policies with structural reforms that boost agricultural productivity to better leverage existing comparative advantages.



Overall, the AfCFTA has been packaged as an opportunity to lead Africa down a path of prosperity, or fall into greater economic depravity that will take decades to equalize. As Anoba sums up, “If things go according to plan, we can finally expect Africa to emerge as the global economy’s heartbeat a decade from now.”

Foreman control loading Containers box from Cargo freight ship

Will The AfCFTA Be The Heartbeat Of The Global Economy?

In the alphabet soup of regional African trade blocs, will
the AfCFTA ease the cost of doing business on the continent?



<hr class="wp-block-separator"/>



Ghana has been named the host of the African Continental
Free Trade Area (AfCFTA) following four years of talks to form a 55-nation
trade bloc. It will be the base for the AfCTA secretariat.



The opportunities for Africa with this new trade bloc are immense. The Economist Intelligence Unit estimates that the AfCFTA will create the world’s largest continental free-trade area, provided all 55 African Union (AU) members join, and has the potential to create an African single market of 1.2 billion consumers whilst eliminating about 90% of tariffs on goods over the next five years. 



So far, 44 African countries have signed up for the historic agreement, the world’s largest free trade area since the formation of the World Trade Organization.



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The AfCFTA is expected to boost the economies of African
countries through employment creation and the promotion of made-in-Africa
goods. But Kayode Akindele, a partner at TIA Capital, a pan-African investment
partnership focussed on credit-based investing across sub-Saharan Africa, is
not opening up the bubbly just yet.



“We already have ECOWAS [Economic Community of West African
States] which doesn’t seem to be working and so why don’t we sort that out
first before we enter a continental trade agreement for Africa?”



And he is not alone in his concerns. 



“There are other factors we need to also consider. Firstly, with the implementation of the AfCFTA, goods made in other continents could be disguised as made-in-Africa to qualify for duty free treatment. There could also be a reduction in government revenue and also this trade bloc also threatens the profitability and survival of infant industries,” says Vincent Acheampong, an economist based in the United Kingdom.



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Of the regional blocs in Africa, including EAC (East African
Community) and SADC (Southern African Development Community), the ECOWAS has
some way to go in terms of performance, according to Muda Yusuf, the Director
General of the Lagos Chamber of Commerce and Industry, in an interview with
CNBC Africa. But he believes there is still reason to be optimistic.



“A continental trading bloc is going to build on the success
of the regional blocs like ECOWAS and other blocs across Africa. So, this
integration is going to build on those blocs. In terms of performance, of
course ECOWAS is the least performing because East Africa is doing very well
and South Africa is doing far better also. But there is no perfect time for
things like this, what is important is for us to get a conviction that economic
integration will work for us and also if we can get our institutions to make it
work,” says Yusuf.



Amongst the many challenges of the ECOWAS is its failure to
implement its vision of a single currency, the ECO, which is part of its plans
to make Africa a more integrated continent. That vision has been postponed
several times by the 15-member group with the newest target date set for 2020
although most experts believe the date to be unrealistic.



The success of the AfCFTA requires not only a trade policy but also a manufacturing agenda, competition, industrial policies and property rights to work well according to Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa, in a statement at the launch event that took place in Niamey, Niger. 



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The ninth edition of the flagship Assessing Regional
Integration in Africa report (ARIA IX) stipulates that AfCFTA’s success will be
due to its ability to actually change lives, reduce poverty and contribute to
economic development in Africa. 



In support of the new trade bloc, Ghanaian President Nana
Akufo-Addo pledged to donate $10 million to the AU to support the operationalization
of the secretariat of the AfCFTA.



Although the AfCFTA will be economically transformative for
Africa in the long-term, the immediate benefits will be restricted due to the
macro-economic uncertainties of regional trade.



“Most African countries are currently not producing the
goods and services that their neighbors import, as a result we do not trade a
lot with each other. It is easier for an African country to trade with a
country in Europe than a country that lies right next to it and these low
levels of intra-African trade need to be addressed before we can reap the full
benefits of the AfCFTA,” says Acheampong.

Tag: AfCFTA

FORBES AFRICA SOCIAL MEDIA

Developing Further The Social Dimension Of The African Continental Free Trade Area

The Potential Impact Of AfCFTA On Social Security And Inclusive Development

‘To See Africa Dress The World’: A Kenyan Fashion Entrepreneur On The Industry’s Promising Future

Will The AfCFTA Be The Heartbeat Of The Global Economy?

Towards One Africa