1.1. Introduction – In the hullabaloo of the then forthcoming general election in India, most of us including the national media, overlooked a very significant development in another continent – Africa – in geological past it used to be India’s neighbour.J 44 out of total 55 African nations signed African Continental Free Trade Area (AfCFTA) on the eve of the 55th anniversary of the formation of the Organisation of African Unity (OAU – the predecessor of the present African Union, AU). These nations signed a document entitled “Agreement Establishing the African Continental Free Trade Area” (AfCFTA) in Kigali, Rwanda on 20-21 March 2018. Today 52 African nations have signed AfCFTA to make it the biggest ever regional trade block on the globe. This unique forging however faces a plethora of problems and challenges. Thus, discussions beginning in 1999 in Sirte, Libya, finally paved way to create a single continental market for goods and services as well as a customs union with free movement of capital and business travellers. The agreement’s operational phase will be launched on July 7 at an AU summit in Niger.
Africa’s rising integration – within Africa and between Africa and the rest of the world – is a fundamental part of understanding Africa’s full potential and realising its true economic prospects. Africa may be the least globalised region of all, but the region has started opening up to the rest of the world. According to Visa Report (2013), export volumes have grown at an average of 8.8% percent per year since 2000, as compared to the world average of 3.7%, corroborating rising global demand for African products and services.
1.2. Problems Facing the AfCFTA – Two largest economies and population groups on the continent nations – Nigeria and South Africa – have not ratified the agreement. Of the two, the current government Nigeria seems the most hesitant to throw their weight behind the AfCFTA. Incidentally, the President of Nigeria, Muhammadu Buhari did not attend the gathering in Kigali due to internal pressures. Within Nigeria there is strong objection to signing the accord from both the Manufacturing Association of Nigeria and the Nigerian Labour Council. Both class camps are concerned that certain measures within AfCFTA would undermine local industries and bring about job losses. The labour opposition believes that the reduction of trade tariffs by 90 percent would result in a large influx of consumer goods that could undermine local markets.
Nigeria wants to involve other industries in the national economy including agricultural producers in the rice and poultry sectors along with the Governors’ Forum. Other key elements to be involved in further consultations are the National Association of Chambers of Commerce, Industry, Mines and Agriculture; Federal Inland Revenue Service; Nigeria Ports Authority; Nigeria Customs Service and Nigeria Immigration Service.
Though South African President Cyril Ramaphosa did attend the conference and pledged support in principal for the idea of a free trade zone in Africa and concomitantly indicated that there needs to be more negotiations and evaluations by national interests. In his own words – “All that holds us back from signing the actual agreement is our own consultation process. We still need to consult at home, to consult in Cabinet, to consult our various partners at Nedlac [the body comprising government, business, labour and community organisations], but also to finally consult our parliamentarians, so we are really just going through what you would call the ‘clean-up process’.” South Africa has recently ratified.
The most formidable impediment to the realisation of AfCFTA is to overcome the dominance of international finance capital, which still determines the exigencies of actual global value and exchange. With the decline of commodity prices in recent years, a considerable amount of this process of growth, largely emanating from Foreign Direct Investment, has swiftly eroded. The overproduction of oil and other energy resources initiated by the US has taken its toll on the emerging economies. Both, South Africa and Nigeria are only barely recovering from recessions and other states such as Mozambique are being compelled to renegotiate the terms of its loans and bond issues. In such a scenario, how can the AfCFTA benefit the long-term interests of workers, farmers, youth and women through the raising of their incomes, living standards and educational levels?
Extremely undulating size of economies of different African nations poses yet another barrier to smoother trade in goods and services. We have already witnessed it in other trade agreements like NAFTA and TTIP, as there tend to be winners and losers in the process. Inclusion of ‘services’ in AfCFTA will sooner than later emerge as a major bone of contention, given the highly asymmetrical nature of ‘services’ across African nations and this factor alone has the potential to impinge AfCFTA irrevocably. Factors determining international competitiveness in services will play a crucial role in erasing the wrinkles on this front.
Yet another bottleneck is that much trepidation already exists in states such as Ghana (and few others) where the current conservative regime has enhanced its military-economic relationship with Washington. Another related problem is many puny African nations are buried under massive Chinese debt and mortgaging their resources (mining and agricultural lands) to lender nation. Already a one-million strong Chinese presence in African continent is dictating its terms on matters economic and strategic. How a reconciliation between ever-bulging debts of the African nations and economic interests of AfCFTA nations will be achieved in such a scenario?
1.3. Implications for Public Health – The most profound plausible impact of AfCFTA will be on the health over one billion Africans. Learning from the experience of other free-trade blocs, AfCFTA raises concerns about the weakening of government-funded public-health systems, increasingly unequal access to care, a medical brain drain, higher drug prices, increased consumption of unhealthy products, and the spread of diseases. Sadly all this has been glossed over.
What has happened in other trade pacts, is bound to be repeated in AfCFTA too. Free-movement rules will allow people to access government-funded health services in any member country. This will increase the number of foreign patients seeking treatment in countries having relatively strong health-care systems, like Kenya and Uganda. But citizens of these destination countries will feel the pinch as underfinanced medical services are stretched even further. Because no country will like to subsidize its neighbours’ health systems, it may lead to political tensions between nations as well as civil strife within the nation.
Under AfCFTA, growth in private health care, including medical tourism is expected. For instance, as demand for cancer treatment soars, visa-free travel will enable people in 15 African countries without radiotherapy services to seek care elsewhere. But there is a downside to this growth. Private health services and medical tourism induce clinicians to migrate from poorer to richer countries, and from public to private health care. This results in weaker, understaffed public-health systems, especially in poorer countries. Moreover, influxes of foreign clinicians will irk local medical professionals by increasing competition for jobs.
There are also worries that big pharmaceutical companies will push for restrictions on imports of generic drugs into the AfCFTA, as happened in Guatemala after the Central America Free Trade Agreement took effect. Such restrictions push up the cost of these drugs and hurt the poor the most. African governments should learn from the experience of other trading blocs, and act now to protect the poor from the unintended health consequences of open trade policies.
Other challenges include – increased competitive pressure, choking of local SMEs, adverse working conditions and job losses, environmental depletion, theft of intellectual property, and akin subjects.
1.4. International Reactions – Liu Yuxi, Chinese ambassador to the AU, welcomed the agreement, saying it will help forge closer economic and trade ties with China – “It is a milestone in Africa which has in recent years been upholding the banner of unity and promoting economic integration,” Liu said, adding that the sides are expected to “build closer economic and trade ties by developing the free trade area and promoting the Belt and Road cooperation.” Already a one-million strong Chinese presence in African continent is dictating its terms on matters economic and strategic and will make best use of AfCFTA to push BRI with more zeal and vigour.
Debate over ‘regionalism versus multilateralism’ has been old and World Trade Organization (WTO) had been somewhat sceptical of regional trade block (as it may perceive them eroding its global authority and reach), has welcomed this development.
To sum up, presently AfCFTA is in a nascent stage and whether its teething problems are solved or compounded, is embedded in the womb of future. Let us all keep our fingers crossed.
Author – Arun Kumar Singh
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