“Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular”-Thomas Macaulay
Definition of terms
AFCFTA is a free trade area founded in 2018 whose agreement will create the largest free trade area in the world measured by the number of participating countries.
Young Africans are typically immature and inexperienced people that are of African descent, who grew up with African values, norms and beliefs.
Elements of AFCFTA
*Rules of origin-These rules are the criteria’s needed to determine the national source of a product. That is, where a product originates from. It is common for countries to be turned into dumping grounds where sub-standard products will be brought in to halt the progress of indigenous products. This has been the fear among many Africa leaders but with the rules of origin in place, criteria for goods that will be eligible for preferential treatment under the AFCTFA will be listed are strictly adhered to.
*Online negotiating forum-In the past, the limitation caused by the non-availability of online negotiation resources lengthened trade and sometimes led to the collapse of business deals. The adoption of online negotiating forum will save time, hasten negotiation and make sure parties involved benefit maximally. The tool will also ensure the technical quality of the offers made increases transparency, and safeguard confidentiality.
*Monitoring and elimination of non-tariff barriers- Non trade barriers hinder trade within Africa to a great extent, but the AFCFTA will help in the removal of already existing non trade barriers, prevent the introduction of new ones capable of crumbling trade for young Africans and ensure there is proper monitoring with a view of ensuring that these barriers to trade are taken away.
*Digital payment- As the world progresses, so also is the method of payment too changing from cash to cashless payment. The AFCFTA provides an avenue for trade to be done through digital mediums. This does not only reduce the exploitation of our forests (paper notes) but encourages the use of environmental friendly mediums for trading.
*African trade observatory- Due to the lack of up to date and reliable trade data, there is a low level of youth’s participation in official trade within Africa. TO solve this problem, the observatory portal will provide youths with information about opportunities lying fallow, trade statistics as well as information about exporters and importers from various countries.
Africa has the youngest population in the world with more than 400 million young people between the ages of 15 to 35 years. This population if well managed has the capacity to make the continent but in the advent of mismanagement, there is bound to be a catastrophic implication. In view of this, there was need for mechanisms to be put in place to secure the future and destiny of the continent. As the African Union and leaders across Africa brainstormed, the idea of the African Continental Free Trade Area was birth to promote free trade between African countries. It aims to bring together all member states of the African Union covering a market of more than 1.2 billion people, including a growing middle class with a combined gross domestic product (GDP) of $2.6 trillion. Estimates from the Economic Commission for Africa (UNECA) suggests that the AFCFTA has the potential to boost intra-African trade by 52.3% and to double this trade if non-tariff barriers are also reduced. Despite the laudable move that kicked off in January 2021, many a youths are ignorant about the benefits in store for them. As a concerned youth, I wish to use this blog post to survey a case study that will better educate my peers from this great continent and contribute towards breaking down the elements of the AFCFTA into simple and easy to understand content.
Lekki is a city in Lagos State, Nigeria. It is a naturally formed peninsula, adjoining to its West Victoria Island and Ikoyi districts of Lagos, with the Atlantic Ocean to its South, Lagos Lagoon to the North, and Lekki Lagoon to its east. The Lekki Free Trade Zone is a free zone situated at the eastern part of the city, which was formerly a slum and covers a total area of about 155 square kilometres. According to the master plan, the free zone will be developed with the integration of industries, commerce and business, real estate development, warehousing and logistics, tourism and entertainment. Presently, over 116 investors have registered with the free trade zone, out of which 16 have commenced full operations while another 100 have signified their intention to register and situate their business within the zone. Investors who operate at the zones are exempted from paying import duties in raw materials imported for production. They also have incentive to retain 100% ownership and capital profit and dividends can be repatriated, tax holidays, license waivers and other advantages. There is also zero corporate income tax on free zone income, zero withholding tax on dividends, zero value added tax on purchases made within the zone, allowance of revenue collection in USD, no inspections of imports until arrival on site in the zone Etc. The zone has already attracted the largest oil refinery in Africa, a fertilizer plant and a sub-sea gas project, by African richest man, Alhaji Aliko Dangote. A new international airport, a Pan African University, St Augustine University, Eleganza industrial city, different beach resorts, and the largest deep-sea port in West Africa is also under construction at the Free Trade area to open up access for export in Africa and beyond. The Free zone project alone is expected to churn out 300,000 direct jobs and 600,000 indirect jobs with the Dangote oil refinery expected to create employment for 235,000 people.
As I sit back to x-ray the Lekki Free Trade zone, I noticed that despite the area occupying just about 155 square kilometres, there are tremendous benefits it offers to the young people in the region. From the creation of jobs, to tax exemption, free inflow and out flow of goods/resources and many more, the free trade zone is a eureka (cry of joy for discovering something). This has made me inquisitive to compare the size of the area to Africa. According to Britannica, Africa, the second largest continent after Asia covers about one-fifth of the total land surface of the earth and has a total land area of approximately 30,365,000 square km. As I punched a calculator to get the percentage of Lekki free trade zone to AFCFTA, here was what was displayed on my screen 0.00051056117. This figure looks very insignificant to those who may be turned off by my statistics/mathematical jargons but it’s only a pointer to the tremendous package the AFCFTA can offer to African youths. Going further with our calculations, let’s divide the area of Africa by the area covered by the Lekki Free trade zone. 30,365,000/155 =195,903. This implies that there are about 195,903 Lekki free trade zones in AFCFTA. If a small region like Lekki can provide direct and indirect job for close to a million people, how much more the AFCFTA that will cover the continent of Africa. Now answer this question Dear African youth. Deal or no deal? I could almost hear you screaming DEEEEEEEEEEEEEEEAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAL!
What’s in it for young Africans
According to Deepak Chopra, “Globalism began as a vision of a world with free trade, shared prosperity, and open borders. These are good, even noble things to aim for”. The youths are bound to enjoy from the free trade zone where goods and services will move across Africa as one territory without any internal borders or other regulatory obstacles to free movement. That means a young phone manufacturer in Cape-Verde will be free to move his products to Madagascar or Ethiopia without fear nor harassment or embargoes.
Through AFCFTA, there will be an increase in value addition across all the countries of Africa. Such value additions could be in the form of service, goods, technology and education. Youths who are the major consumers of goods and services will benefit greatly through an increase in living standard.
“While I believe firmly in open markets and free trade , I also believe an open market needs a level playing field”- Philip Hammond.
The AFCFTA will provide African youths with a conducive environment to run businesses. This provision will help in the establishment and survival of more youths led enterprises to address the issue of unemployment and make young people job creators.
Due to cultural and inequality limitations, many women owned businesses in Africa are usually vulnerable to unfavourable trade policies. This prevented many a girls from venturing into trade but with the accompanying protection of women trade by this free trade, there is hope for African women.
“The establishment of free trade agreements can be a critical and progressive step towards greater economic integration and continues to become more valuable in an increasingly global world”-Dan Kildee
For skilled youths that love travelling, this provides them with ample opportunity to render services where there is demand for them without restrictions. For example, a skilled Massai herder from East Africa will be able to offer service in West or North Africa freely without hitch.
From the case study examined, it is not surprising to note that the site for the free trade zone that was formerly a slum has become an industrialized city. This is a result of investors been attracted to the region. The same too is bound to happen with AFCFTA. The industrialization of Africa will provide jobs for our unemployed youths, develop the land scape of our towns and villages and reduce poverty through the creation of steady cash flow.
In environments where trade takes place, there is bound to be disputes due to misunderstanding. On several occasions, such disputes have marred the reputation of businesses and led to their fold up. The AFCFTA has employed a special mechanism to settle disputes within the trade zone. Through this, many SMEs will be protected from trade troubles, litigation will be shortened and there will be justice for all.
Lekki Free Trade Zone. China-Africa Lekki Investment Ltd
Lekki Master Plan. Lagos State Government