A New Age for Africa: AfCTA and RTAs as a Stepping Stone for Liberalization

TMA Board Chair and former Ethiopian PM, met with H.E. John Mahama at the Flagstaff House, Accra, to discuss trade facilitation, regional integration, and AfCFTA alignment with Ghana’s priorities (2025)

Credit: Teshetafesse / Wikimedia Commons

Regional Trade Agreements (RTAs) are no new panacea for addressing the economic obstacles of developing countries, and have long served as stepping stones for economic development and liberalization through regional trade integration and greater bargaining power. Two of the most famous RTAs, NAFTA/USMCA and the EU, have accelerated the development of partner countries by strengthening regional connections and establishing world dominance by combining economic bargaining power. For the EU in particular, regional integration has allowed for the development of a single market system that is known for being one of the largest and most efficient trade areas in the world, while also touting seven decades of stability and a growing diversity of cultures, languages, and identities. African leaders hope that the introduction of AfCFTA over the next few decades will provide a similar result by delivering prosperity for Africa’s burgeoning population and bringing world trade and commerce into the modern era. 

AfCFTA is now the largest free trade agreement in the world, covering the largest area in terms of the number of member countries, territory, and population. Originally signed by 18 countries in 2018 in Kigali, Rwanda, the AfCFTA now encompasses 1.3 billion people in 55 countries and 8 Economic Unions, totaling a combined GDP of over 3.4 trillion USD. As of February 2023, 54 of 55 countries had ratified the regional trade agreement, affirming the legitimacy of AfCFTA and the policies it encompasses. As a regional trade agreement, the AfCFTA is able to specifically address regional issues, which include four main sectors identified as “high potential” by the African Union: automotive, agriculture and agro-processing, pharmaceuticals, and transport and logistics, which make up major intra-regional trade sectors in the African economy, representing only $130 billion in the imports of goods and services yearly. Like many other regional trade agreements, the AfCFTA has created a unique opportunity for countries within the African Union to increase cooperation around shared language, culture, and interests, which allows it to hone in on specific areas that world economic institutions such as the WTO are unable to address due to the sheer size and variety of interests represented. Despite its size, covering 54 countries, AfCFTA maintains its strength as a regional trade agreement because all of its members share relatively similar economic interests and development goals. AfCFTA has gained traction and legitimacy since its initial ratification in 2019 due to its approach that is “realistic in recognizing the very different and wide-ranging socio-economic capabilities of its 54 member states [through an] incremental approach to harmonization [of the African Union]”.

Moving forward, the success of AfCFTA is dependent on a variety of factors working in tandem with an evolving African discourse that has changed since decolonization in the 1990s. In the short term, RTAs tend to be successful in integrating and developing local economies into regional markets when specific issues are addressed according to regional interests and there is a clear denomination of standards and regulations across borders. This allows local economies “to grow their industries more effectively in support of local and regional economic development and transformation.” AfCFTA has addressed this directly through the creation of extensive trade initiatives, settlement authorities, and compensation funds similar to the WTO. These have aided the progressive elimination of fragmented markets in favor of a wider regional market that connects its local economies through effective regulation, consumer protections, strengthened supply chains, investment in economies of scale, and a varied market. By incorporating goods from different areas of the African Union according to comparative advantage, this policy will allow for open trade of a greater variety of goods and services than previously possible. The implementation of a wider organizational system in conversation with AfCFTA’s focus on specifically developing industries has allowed for more immediate progress in the integration of African countries into the continental market, while also promoting long-term economic growth and stability and encouraging outside investment. With this initial success of the AfCFTA in its clear-cut approach to sectoral development and wider implementation for winners and losers, follows an ideological change in the discourse over the stability and reliability of participation and investment in the African economy. 

Prior to the 2020s, the discourse on African intra-continental trade held a particularly negative reputation, as many experts felt that trade in the region had not fostered effective economic growth and encouraged a diversion of trade and incomes between countries, which contributed to the growing instability of the region. Since AfCFTA was ratified in 2018, integration has taken the center stage of regional trade negotiations, as economic research has shown a positive trend between trade integration and economic development; hence, discourse rapidly turned in favor of investment in Africa. One such finding estimates that the successful implementation of AfCFTA could raise the incomes of Africans by 9 percent and lift 50 million people from extreme poverty in the next decade alone if the agreement continues its path of integration and cooperation. The growing legitimacy of the AfCFTA and the African Union among economic researchers has begun to translate to the world economic stage. Not only has AfCFTA been officially recognized by the WTO as a relevant trade agreement to the world trade system, but major economic powers have taken notice as well, with the G20 extending a formal invitation to the African Union to join its 2024 Summit for the first time.

This exhibits a flourishing sentiment made possible by AfCFTA’s implementation of a dispute mechanism similar to the WTO, a simplification and incorporation of existing trade agreements, a consensus of participation within the African Union, and an Africa that promises resilience and unity in the long term. Such elements lead to an ever-growing interest of foreign companies looking to invest in the continent’s now high-potential working population that will continue to spur intra-regional and global economic growth to even greater heights into the late 21st century. In 2025, Africa’s new role in the global economy exhibits the growing liberalization of the world as a result of the implementation of RTAs like AfCFTA, as world economic forums have begun to shift the boundary of trade towards inclusive globalization and the role of developing areas as negotiating partners on the world economic stage. The supportive and uniform system that AfTCA has provided the African Union with serves as a reminder to the world of just how effective RTAs can be for economic development and liberalization when agreements are truly complementary and representative of their members. 

This article was originally written as a case study for PSC 2439 under the guidance of Professor Heidi Heibert.