Making African free trade work for the youth

This article is written by Willice Onyango, Executive Director, The Youth Cafe.

• The problem: Trade integration across Africa has long been limited by outdated border and transport infrastructure and a patchwork of differing regulations across dozens of markets. Governments have often erected trade barriers to defend their markets from regional competition, making it more expensive for countries to trade with near neighbours than countries much further afield.
• Why it matters: In a 2020 report, the World Bank estimated that by 2035, real income gains from full implementation of the agreement could be 7%, or nearly $450 billion. The Bank predicts that the agreement could contribute to lifting an additional 30 million people from extreme poverty and 68 million people from moderate poverty.** **
• The solution: The African Continental Free Trade Area is an ambitious trade pact to form the world’s largest free trade area by creating a single market for goods and services for almost 1.3 billion people across Africa and deepening the economic integration of Africa. The trade area could have a combined gross domestic product of around $3.4 trillion, but achieving its full potential depends on significant policy reforms and trade facilitation measures across African signatory nations.

Preamble

The African Continental Free Trade Area (AfCFTA) is one of the Flagship Projects of Agenda 2063, Africa’s development framework. The agreement founding AfCFTA was brokered by the African Union (AU) and signed in Kigali, Rwanda, on 21 March 2018. As of February 2023, 54 AU member states had signed it. AfCFTA was entered into force on 30 May 2019, with the Operational Instruments governing trade under the AfCFTA regime being launched in Niamey, Niger, in July 2019. Trading under the AfCFTA regime, however, commenced on 1 January 2021.

It is undoubtedly true that the world’s largest free trade area seeks to empower the people of Africa, with youths making up a huge part of the potential beneficiaries.

Part of the AfCFTA’s mandate is to eliminate trade barriers and boost intra-Africa trade, particularly to advance value-added trade production across all service sectors of the African economy. Therefore, it is undoubtedly true that the world’s largest free trade area seeks to empower the people of Africa, with youths making up a huge part of the potential beneficiaries.

However, while others celebrate the milestone that AfCFTA represents for Africa and its youth, others remain sceptical, suggesting the creation of a free trade area for Africa will expose youths to a myriad of problems that include job losses for the youth, and massive spread of infectious diseases due to the free passage of people.

The challenges are discussed in detail below:

AfCFTA and the youth: Downside

The problems associated with the AfCFTA are threefold; economic, health and environmental.

Free trade agreements cause job losses as countries seek cheap labour. Proponents of free trade say that new agreements improve the economy on all sides. However, the World Trade Organization (WTO) acknowledges that free trade leads to job losses. Adverse working conditions and competition from foreign industries are also potential challenges likely to be brought about by the AfCFTA. Therefore, this necessitates that youths in the labour force will be affected.

On the health side, the free trade agreement is likely to foster the faster and quicker spread of infectious diseases like cholera due to the unrestricted movement of patients across the member states in search of quality healthcare services. 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. With such restrictions likely to increase the cost of drugs, those living in extreme poverty, including youths, will be hurt the most.

As free trade expands total economic activity, greater pressure is placed on the environment through increased inputs from natural resources such as energy, timber or freshwater sources needed to drive an expansion in production and through greater volumes of air and water pollution emissions. When the environment is degraded, everyone suffers from the serious effects of climate change.

Despite the challenges this economic landmark poses for Africa’s young people, there are ways the effects can be reduced or mitigated, and they are discussed in the next section.

Making AfCFTA work for the youth: Mitigation measures

The negative impacts of the free trade area for Africa can be mitigated in several ways, bettering the lives of the continent's residents, including youths. These recommendations include the **introduction of an African Health Insurance Card, **which will help to compensate host countries for government-provided health services used by foreigners, as is the case with the European Union’s European Health Insurance Card.

Holding talks to ensure the agreement covers investment and competition policy, intellectual property rights and e-commerce will also ensure youth in different African countries do not get unnecessary competition for employment and business. This would help to mitigate issues such as brain drain perpetuated by the unrestricted movement of professionals across the continent.

Removing trade barriers on environmental goods is another way to mitigate challenges associated with creating a free trade area. An example of this would be cutting tariffs on environmental goods, such as renewable energy technologies or environmental monitoring equipment, providing a means for all countries to address air pollution. This will counter the effect of the excess pollution that comes with having a free trade area and positively impact youths in Africa.

Epilogue

The AfCFTA is undoubtedly Africa’s biggest landmark achievement meant to improve and benefit the continent economically, and one can only wonder why it came so late. Young people are the most likely to benefit from this treaty as they make up a huge part of the economically active demography.

However, despite all the good associated with the opening of Africa to Africans, the development has a downside. Opening state borders to all Africans will expose the continent to the massive spread of infectious diseases, leading to overstraining health services in countries with good health services. Most job losses among youth will be inevitable. However, these problems can be mitigated if signatories of this milestone consider the suggested measures.

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