This article is published under Bridges AfricaVolume 5 – Number 3

Five years on, the progress and the future of the UK’s Africa Free Trade initiative

With recent developments in trade and regional integration in Africa, the UK All-Party Parliamentary Group on Trade Out of Poverty is launching an inquiry into the progress and future of the UK’s Africa Free Trade initiative.

Darlington Mwape, Peter Lilley

It has been five years since the Africa Free Trade initiative (AFTi) was launched. With the aim to help African countries integrate with each other and into the world trade system, the AFTi was a top priority in the UK’s five-year trade strategy published in February 2011. Though the AFTi has contributed to notable milestones in designing and implementing policies and programmes in the area of regional integration and trade facilitation in Africa, much more can be achieved in today’s fast-changing landscape of global trade. The inquiry into AFTi (see section below for more details) launched by the UK All-Party Parliamentary Group on Trade Out of Poverty (APPG TOP) comes at a good time to explore the emerging opportunities in further expanding Africa’s trade; as an instrument to achieve sustainable growth, employment and poverty reduction; as well as defining the role of development partners, including the UK, in supporting countries so that they can realise these opportunities.

The Africa Free Trade initiative

Boosting trade and investment policy tools to achieve economic growth and development has been a priority in the UK’s trade strategy. The AFTi provides investment, technical and political support to trade reforms, with the aim to facilitate trade between African countries, and the rest of the world.

“Trade and enterprise have the power to change people’s lives. As we are seeing now on every continent, what will lift tens of millions out of poverty in the long run is the dynamic engine of economic growth. And that means African countries buying from and selling to each other, doing business with one another and the world,” wrote UK’s Prime Minister David Cameron, few months following the official launch of the initiative in February 2011.

The AFTi has since brought together regional trade initiatives from across the UK’s Department for International Development (DFID), the Department for Business Innovation and Skills (BIS) and the Foreign and Commonwealth Office (FCO) to cut red tape, reduce tariffs and improve infrastructure in Africa.

One of the ambitions of the AFTi was to link landlocked countries with the sea, and subsequently increase market access for these countries, by investing in One-Stop Border Posts (OSBP) and building soft and hard infrastructure to streamline trade bureaucracy. TradeMark East Africa, a US$700m multilateral Aid-for-Trade vehicle initiated by the UK, has been instrumental in reducing trade barriers in East Africa, such as implementing OSBP in countries including Burundi, Uganda, Tanzania and Kenya, and reducing custom clearance times at borders. For example, in Tanzania, time to cross borders was reduced by 30 percent through setting up four OSBPs in Holili, Mutukula, Kabanga, and Tunduma.

The AFTi has also provided technical and financial support to Africa’s regional integration efforts. Most notably, the AFTi has contributed to the launch last year of the Tripartite Free Trade Area which encompasses Africa’s largest regional economic communities namely, the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC).

As AFTi reaches its five-year mark, it is important to take a fresh look at the current progress and the new areas of opportunities where the UK can play a role in supporting trade and regional integration in Africa.

Opportunities for the future of African trade

With the changing landscape of global trade (See Bridges Africa, Volume 5, Number 2), new opportunities are opening up for African countries to expand, restructure and increase the value of their trade, both regionally and internationally.

The progress being made in regional and continental integration efforts in Africa presents significant potential for trade, economic and social gains. Negotiations on the Continental Free Trade Agreement (CFTA) – Africa’s own mega-regional agreement – began in February 2016. Once implemented, it is estimated that the CFTA would contribute to an increase in intra-African trade US$ 35 billion per year by 2022. The Tripartite Free Trade Agreement (TFTA) has also entered into a new phase of negotiations which will tackle issues beyond trade barriers of goods, such as trade in services and intellectual property. These are catalysts to long-term economic growth for a number of African countries.

Beyond trade agreements, changes in the global economy have created new market opportunities for African countries to tap into. With the number of mobile phone subscribers reaching 348 million in Sub-Saharan Africa in 2014, there has been much excitement and hope that digital technology can enable African countries to leapfrog traditional stages of industrial development. The changing economic structure and consumer demands of emerging economies, such as China, also provides a potential for African countries to accelerate their process of industrialisation. Trading through global value chains has real potential for Africa to realise its comparative advantage and participate in various levels of the value chain.

In light of these new opportunities for African countries, there is a need for development partners, such as the UK Government, to reflect on how the past and current policies can be redesigned to help African countries to overcome new challenges in order to realise these opportunities.

Inquiry into the UK’s Africa Free Trade initiative

With a new UK government in place since May 2015, and a new aid strategy launched in November 2015, now is a good time to review the progress, potential and future of the AFTi.

Launched by the All-Party Parliamentary Group on Trade Out of Poverty (APPG TOP), the inquiry into the AFTi is examining the lessons that can be learned, reviewing the challenges and barriers to achieving the goals that were set out, and considering what a future AFTi should look like, in particular the targets it should seek to achieve, and the means and partnerships through which it will be delivered. As part of the inquiry, the Committee[1], co-chaired by Lord Stephen Green, former UK Minister of State for Trade and Investment, and Ali Mufurki, Chairman of Infotech Investment Group, is engaging with a range of stakeholders to understand the recent developments on the African trade agenda, and examine what has been achieved in AFTi since 2011.

This inquiry can contribute to building on AFTi’s successes and creating a greater, more sustainable impact in Africa in the future. The report will be published and presented to the UK Prime Minister and Ministers from the Department of International Development (DFID), Foreign & Commonwealth Office (FCO) and Department for Business, Innovation & Skills (BIS) in the summer of 2016. The findings will then be discussed with African governments, secretariats of Regional Economic Communities, the African Union, and other key policy making bodies.

Authors: Darlington Mwape, Senior Fellow, ICTSD, former Permanent Representative of Zambia to the WTO. Peter Lilley, Member of Parliament, Co-Chair of All-Party Parliamentary Group on Trade Out of Poverty.

[1] Other Committee Members are Myles Wickstead, former Head of Secretariat, UN Commission for Africa and Darlington Mwape, Senior Fellow at International Centre for Trade and Sustainable Development (ICTSD) and former Permanent Representative of Zambia to the WTO.

It's only fair to share...Share on FacebookTweet about this on Twitter