A Superficial Assessment Of Trade Agreements For Investors To The African Continent

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Investors both native & foreign can leverage and understand pertinent trade agreements in Africa for mutually beneficial business transactions/developments.

Leveraging such pertinent trade agreements on the African continent may requires in-depth research, market analysis, partnership, advocacy, and staying up-to-date with developments, all of which could assist in informing investment decisions & approach with long term equitable less frictional operations.

1. Research: Investors should research and understand the trade agreements that apply to the countries and industries they are interested in investing in. This may include understanding the scope of the agreement, its impact on trade flows, and the benefits and challenges that could arise from being party the agreement or ramification for omitting to comply.

• Market analysis: Investors that  undertake market analysis to understand the market and the specific opportunities available. Often get better perspective.  Enabling a comprehensive   understanding of the regulatory environment, market size, competition, and local laws.( prefeasibility & feasibility assessment to buttress any business plan or Investors presentation.
• Partnership with local Companies/Institutions: Non native Investors are encouraged to partner with local Companies while native companies advised to learn to collaborate. Investing in local companies or collaborations with entities that have an understanding of the local market may assist in navigating  the complexities of some of these trade agreements in the region.

• Advocacy & Lobbing : Investors may find it prudent to engage in advocacy and lobbying efforts legally & in accordance to fair trade practices to influence policy-making decisions aimed at strengthening, fostering & enabling conducive business climate for effectiveness.
• Updated : Investors that  remain up-to-date with developments or amendments to various trade agreements & related policies gain an edge. Staying relevant to changes via the use of policy publications, research reports, conferences, and events relating to trade policies and agreements on the African continent. Could make a huge difference in the survival or failure of a prescribed venture.

Here are a few Trade Agreements found on the continent divide into four for a better grasp of their effectiveness & complexity.

West Africa:

– The Economic Community of West African States (ECOWAS) has the ECOWAS Trade Liberalizations Scheme (ETLS) that was established in 1979 to promote free trade among member states. It has led to reduced tariffs and non-tariff barriers on goods traded within member states. Additionally, the West African Economic and Monetary Union (UEMOA) has a Common External Tariff (CET) that was established in 1990 to harmonize tariffs on goods imported from non-member countries.

East Africa:

– The East African Community (EAC) has the EAC Customs Union that was established in 2005 and the EAC Common Market Protocol that was established in 2010. The Customs Union has reduced tariffs on intra-regional trade, while the Common Market Protocol has eliminated barriers to the movement of goods, services, and people.

South Africa:

– The Southern African Development Community (SADC) has the SADC Free Trade Area (FTA) that was established in 2008. The FTA has reduced tariffs on intra-regional trade and aims to increase trade volumes and investment within the region.

North Africa:

– The Arab Maghreb Union (AMU) was established in 1989 to promote economic cooperation among five North African countries (Algeria, Libya, Mauritania, Morocco, and Tunisia). However, the AMU has been largely ineffective due to political and security issues in the region.

Overall, there are more than 30 regional trade agreements that exist on the African continent. While some have been beneficial in reducing tariffs and improving trade, others have not been as effective due to implementation challenges, bureaucratic hurdles, and lack of political will.

In recent years spanning from 2012 till May 2019  when the AfCFTA Agreement of  African Continental Free Trade Area   entered into force. This agreement seeks to conjoin all 55 African Nations for trade collaborations amongst other objectives. As per their website:https://au-afcfta.org/

is one of the flagship projects of Agenda 2063: “The Africa We Want”. Which is a highly ambition trade agreement, with a comprehensive scope that includes critical areas of Africa’s economy, such as digital trade and investment protection, amongst other areas. By eliminating barriers to trade in Africa, the objective of the AfCFTA is to significantly boost intra-Africa trade, particularly trade in value-added production and trade across all sectors of Africa’s economy.

Naturally the realization of this efforts will be very notable for progress & efficient trading relations.

However, to revamp, renegotiate, or render obsolete non-performing or rigid agreements, African countries could prioritize stronger political will, increased transparency, and capacity building for implementation.

 Furthermore, seeking technical assistance and support from each other or international organizations while developing formidable partnership relations with prerequisite levels of transparency.

In conjunction to collaboration and best practices, countries that have more successful trade agreements tend to have stronger governance structures, better implementation capacity, and a more favorable business environment.

Countries with successful collaboration can serve as models for others looking to improve their trade relations.

In terms of investor sentiment, positive developments in trade agreements can lead to increased investment and economic growth on the continent.

Moreover, investors may also be triggered to be cautious if there is instability, unpredictable policies, or lack of progress in regional integration efforts.

Especially with some Countries recently adopting into law policies which may limit certain freedoms

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