It has been almost four months since economic and trade movements began within the African Continental Free Trade Area (Zlecaf). What has that really changed?
Symbolically launched in July 2019, the African Continental Free Trade Area (Zlecaf) was a beautiful promise from the countries of the African Union, which promised "peace and prosperity in Africa" and that this zone would become "the largest commercial space in the world ”. After the first works, it's time for action. And it's been about four months since the Zlecaf was really launched. The Zlecaf integrates all African economic communities, and therefore all the countries of the continent, within the same free trade area.
What is Zlecaf?
There is, of course, a long way to go… Currently, the free trade agreement operates in 36 countries, while 17 other countries are potential members who should soon ratify this agreement, which is supposed to represent an important step for the organization. economic integration and multilateralism in Africa.
To date, negotiations between signatory members have largely focused on reducing tariffs and eliminating non-tariff barriers to smooth the flow of current goods. However, if the African populations want to benefit from this project, other initiatives will be necessary. Starting with an even wider ratification on the continent.
During this year, negotiations will focus on intellectual property, investment and competition issues. The Zlecaf quickly turned out to be the most ambitious free trade project in recent history. And not just on the African continent. Two questions arise, however: what have we learned from previous African economic agreements? And precisely, isn't this project a little too ambitious?
Zlecaf, despite its size, did not come out of nowhere. In Africa, many regional trade and economic agreements have been signed over the decades. Starting with the Economic Community of West African States (ECOWAS) and by Southern African Customs Union (Sacu), which have been operating for decades, but which ultimately had little impact on the national development of member countries.
Economic communities in Africa even represent an additional stage of taxation for most. They are subject to a lot of foreign interference, mainly from the French and British governments, and from international financial bodies. Since their birth, they have also been the scene of several financial scandals and financing agreements with interest rates so high that they are harmful for the signatory countries. Examples of Ghana's European debt or of Angola's indebtedness to Chinese national banks are prime examples of bad financial governance.
Is there strength in unity?
The hallmark of Zlecaf is that it aims to cover the entire continent - although this is still a long way off. This will allow the agreement to touch on many areas, despite the challenges that this poses, namely consensus building and the implementation of decisions in many member countries. And while the deal is largely confined to trade issues, it is likely to expand in the future, as ongoing discussions on investment and intellectual property show, to other topics.
Importantly, a semblance of a common capital structure will soon emerge to accompany the deal. This represents as much a hope for the indebted African countries as a threat for the investment or development banks, which are gradually losing the financial control of African countries, such as the IMF, ADB, European banks and funds of American and Chinese investment. But it would make it easier for African countries to access private capital within the continent.
Another natural extension of the agreement would involve new rules on the movement of people and workers in Africa. Enough to gradually slide the Zlecaf from a commercial institution to a political institution that would resemble a kind of European Union.
Endless deliberations and hauntings of the past
Within the Zlecaf, it will also necessarily be a question of currency. Common currencies have long been a weakness of African economies. The CFA franc is the best example. The ability of African countries to conduct independent monetary policy has been limited by two factors: de many African countries have a currency that is vulnerable to commodity prices, which undermines long-term economic stability; and some African states use monetary anchors to avoid strong fluctuations, de facto abandoning their fiscal sovereignty.
These same countries, and still others in Africa, have their respective currencies printed abroad, mostly in Europe. And therefore lose their monetary sovereignty and any possibility of diluting the currency or causing inflation that would allow vital development projects without having to go into more debt.
The Zlecaf, as the larger and more inclusive community, could facilitate the growth of existing common currencies. Or maybe even finally consider a common currency, this one African.
It is important to recognize that the future of Zlecaf and the direction it takes will depend in large part on the importance that its members place on it. For this political and economic project to continue, large investments in diplomatic and economic capital will be necessary. Zlecaf will also have to avoid becoming a political battleground, as happened with the Arab Maghreb Union in North Africa, where disagreements between the Algeria and Morocco on Western Sahara have prevented any meaningful cooperation between its members.