Advancing EU-Africa cooperation in light of the African Continental Free Trade Area

Summary

This policy brief lays out the obstacles to both AfCFTA implementation and realisation of its full economic potential. It also explores how the EU can engage in providing targeted support and how to strengthen AfCFTA-related cooperation between Africa and the EU. The analysis and recommendations draw on a review of the literature and policy documents by the German Development Institute (DIE), the African Center for Economic Transformation (ACET) and the European Centre for Development Policy Management (ECDPM), as well as two online expert seminars on 17 and 24 June 2020.

KEY MESSAGES

• The African Continental Free Trade Area (AfCFTA) can play an important role in helping African countries diversify their productive capacities and integrate into regional and global value chains. The AfCFTA can also support Africa’s COVID-19 recovery, and increase its economic resilience to future shocks.

• Successful implementation of the AfCFTA, however, is not a given. Political will and sufficient capacity are needed at various levels of government and in the private sector to turn the AfCFTA’s potential into tangible development outcomes.

• With the AfCFTA, Africa has embarked on the biggest economic integration initiative, in terms of number of participating countries, since the creation of the World Trade Organization (WTO) 25 years ago. Given the AfCFTA’s focus on promoting rules-based trade, supporting its implementation is in Europe’s own interest.

• The AfCFTA creates space for the EU to move beyond the traditional development cooperation niche. The AfCFTA offers a strategic opportunity for African and European actors to meet on equal terms, to enhance political partnership based on mutual experience sharing, and to strengthen links between businesses in Africa and Europe.

• The AfCFTA, on its own, is unlikely to achieve the overarching goals set in the AfCFTA Agreement. Considerable accompanying measures, reforms and investment are also needed. The EU can support African Union (AU) member states to pursue the complementary economic reforms that will yield the biggest gains.

• These reforms are understood to include reducing the costs of logistics, improving infrastructure, streamlining non-tariff measures, improving the investment and business climate, and advancing training and education for a skilled workforce. Beyond continental free trade, EU support for AfCFTA can make an important contribution to Africa’s post-pandemic economic recovery.

• Given the AfCFTA’s central role in African economic development, the EU should prepare and implement its trade-related support in a way that is supportive of the national, regional and continental dynamics of economic integration. The AfCFTA should be seen as the central pillar of the AU’s goal to create an African Economic Community.

• The EU’s development cooperation support for the AfCFTA can only be effective if it is well coordinated and aligned to African needs and priorities. Development cooperation that does not meet these requirements risks detracting from or offsetting efforts to establish the AfCFTA and realise its Pan-African integration ambitions. Joint programming is a key tool for aligning European support to African priorities.

• One example of Africa’s interest, where EU support can make a difference, is strengthening the continent’s business environment and private sector. Africa’s private sector plays a crucial role in translating the AfCFTA’s institutional framework into practical action on the ground. Hence, special emphasis should be given to supporting the business environment and the development of productive and trading capabilities.