The Impact of the Africa Continental free trade area on Cameroon trade policies

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

The AfricanContinentalFreeTradeArea (AfCFTA) is a free tradearea encompassing most of African. It was established in 2018 by the AfricanContinentalFreeTradeAgreement, which has 43 parties and another 11 signatories, making it the largest free trade area by number of member states, after the world trade organization, and the largest in population and geographic size, spanning 1.3 billion people across the world’s second largest continent.

The agreement founding AfCFTA was brokered by the African Union (AU) and signed by 44 of its 55 member states in Kigali, Rwanda on 21 March 2018. The proposal was set to come into force 30 days after ratification by 22 of the signatory states. On 29 April 2019, the Saharawi Republic made the 22nd deposit of instruments of ratification, bringing the agreement into force on May 30; it entered its operational phase following a summit on 7 July 2019, and officially commenced 1 January 2021. AfCFTA’s negotiations and implementation are overseen by a permanent secretariat based in Accra, Ghana.

Under the agreement, AfCFTA members are committed to eliminating tariffs on most goods and services over a period of 5, 10, or 13 years, depending on the country’s level of development or the nature of the products. General long-term objectives include creating a single, liberalised market; reducing barriers to capital and labor to facilitate investment; developing regional infrastructure; and establishing a continental customs union. The overall aims of AfCFTA are to increase socioeconomic development, reduce poverty, and make Africa more competitive in the global economy.

The United Nations Economic Commission for Africa estimates that AfCFTA will boost intra-African trade by 52 percent by 2022. A report by the World Bank anticipates that AfCFTA could lift 30 million Africans out of extreme poverty, boost the incomes of nearly 70 million people, and generate $450 billion in income by 2035. On January 13, 2022, AfCFTA took a major step towards its objective with the establishment of the Pan-African Payments and Settlements System (PAPSS), which allows payments among companies operating in Africa to be done in any local currency.[

Among the 55 AU member states, 44 signed the African Continental Free Trade Agreement (consolidated text), 47 signed the Kigali Declaration and 30 signed the Protocol on Free Movement of People at the end of the 2018 Kigali Summit. Benin, Botswana, Eritrea, Guinea-Bissau, Nigeria, and Zambia were among the 11 countries that did not initially sign the agreement. After the 2018 Kigali summit, more signatures were added to the AfCFTA. At the 31st African Union Summit in Nouakchott on 1 July 2018, South Africa (the second largest economy of Africa), Sierra Leone, Namibia, Lesotho and Burundi joined the agreement. In February 2019, Guinea-Bissau, Zambia and Botswana also joined. Kenya and Ghana were the first nations to ratify the agreement, depositing their ratification on 10 May 2018.

Of the signatories, 22 needed to deposit the instrument of ratification of the agreement for it to come into effect, and this occurred on 29 April 2019 when both Sierra Leone and the Sahrawi Arab Democratic Republic deposited the agreement. As a result, the agreement came into force 30 days later on 30 May 2019. At this point, only Nigeria (the continent’s largesteconomy), Eritrea and Benin had not signed.

1.2 Problem statement

The proliferation of trading agreement has been the norms in the global economy for the last five (5) decades. Most of today International trade is done via means of trade agreement, this as a result of the benefits there in.

The Africa Continental free trade area which come to operation as of 1^stJanuary 2020 which aim is to enable the free flow of good and services across the continent and boost the the trading position of Africa in the global market has been under debate regarding it’s impact on the 55 economy which are members as well as Cameroon in particular.

One of the issue of debate which this study would be build on is the issue of increase competition. This increased competition coming from other African economic having Monopoly and economic of scale on certain product, adversely impact Cameroon industries as it lead to fears competition hence it reduced performance of home industries.

1.3 Research Questions

Main research question

• Why Cameroon join the Africa Continental free trade area.

Specific research questions

• What are the impact of Cameroon joining the Africa Continental free trade area.
• What are the objective of Cameroon joining the Africa Continental free trade area.