AfCFTA (African Continental Free Trade Area)

The AfCFTA (African Continental Free Trade Area) is a free trade agreement among African Union states that gradually removes customs duties on most intra-African trade. On March 21, 2018, in Kigali, forty-four African Union states signed the agreement establishing the African Continental Free Trade Area; the threshold of twenty-two ratifications was reached in spring 2019, the agreement came into force on May 30, 2019, and trading under its regime officially opened on January 1, 2021. The secretariat sits in Accra. The AfCFTA is a framework agreement supplemented by protocols: trade in goods, services, dispute settlement, then investment, competition policy and digital trade. On goods, each state commits to removing duties on 90% of its tariff lines, over five years for most and ten for the least developed countries, with 7% of sensitive products on a longer schedule and 3% excluded. The record of the first years is thin. Rules of origin for automobiles and textiles were slow to come, and the first shipments under preferential treatment went through the Guided Trade Initiative launched in October 2022 with a handful of countries. For an underwriter, the AfCFTA touches credit insurance more than political risk. It changes the duty paid by the Kenyan buyer of a Ghanaian manufacturer; it changes neither the convertibility of the cedi nor the Kenyan central bank's ability to process a transfer. The Pan-African Payment and Settlement System backed by Afreximbank (African Export-Import Bank), operational since 2022, aims to settle this trade in local currencies without going through the dollar; currency risk does not disappear for all that, it changes counterparty. The investment protocol, adopted in February 2023, could in time overlap part of the bilateral investment treaties, subject to its own ratifications. Practitioners read it as a text under construction, not yet as a protection.