Analysis

The draft Pan-African Investment Code (PAIC) or (Code) was released in 2015 with the objective of fostering cross-border investment flows in Africa. While the draft code currently serves as “guiding instrument”, it remains a valuable blueprint for solving the long-standing investment problems plaguing the region. It is therefore imperative that African countries hasten their efforts to ensure its implementation as a binding treaty document. The decision to develop the Code was welcomed by experts as an opportunity to create a binding legal framework to oversee Africa’s industrial and structural transformation. The Code was also expected to balance the lopsided nature of the relationship between investors’ rights and host states’ obligations.

The smooth and effective running of the AfCFTA and proper negotiation in the second phase of negotiations could help in the attainment of the continent’s most daring and ambitious goal yet. This is the creation of a single African market characterized by digital, financial and social inclusion; with our very own cities (Lagos, Nairobi, and Cape Town) competing to be the Fintech hub of the continent and the globe!

In the specific context of the AfCFTA, (international economic) law is supposed to focus on producing rules designed to promote trade liberalisation by eliminating any constraints that are likely to prevent the flow of capital across the continent and to restrict the growth of business activities well as their expansion across national borders.

The signing of the Agreement establishing the African Continental Free Trade Area has been greeted with a lot of fanfare and has also been viewed as the possible Eldoradofor intra-African trade. While the text of the Agreement if implemented, would significantly improve Africa’s trading position vis-a-vis the global north and the far east, there are several obstacles that need to be crossed. One   obstacle is the ability of Africans to move within the continent freely either for leisure or to engage in commerce. It is this obstacle that the Protocol on Free Movement is created to address.

The first seeming obstacle to the emergence of a single African market is the contradictions between the stated aims of AfCFTA and some of the principles set out in the AfCFTA Agreement. As noted earlier, AfCFTA’s objectives include creating “a single market” and laying “the foundations for the establishment of a Continental Customs Union”. Yet, one of the principles under Article 5 is “variable geometry”, that is, differentiated integration. Of course, variable geometry was designed to recognise the heterogeneity and diversity in Africa’s economies. However, a single market is not consistent with an a la carte approach, where members integrate at different speeds.

Gender empowerment and trade liberalisation are mutually exclusive, and to think they form an antipodal nexus defeats the purpose of regional trade as envisaged under WTO altogether. I hope that subsequent discussions around AfCFTA will seek to promote and stimulate gender mainstreaming in the carrying out of trade facilitation amongst African countries. Indeed, infrastructural deficit will hinder the realization of AfCFTA. To obtain the benefits under AfCFTA, African countries must aggressively develop their infrastructural capabilities. Most goods are transported through roads. Good road and rail networks facilitate trade within borders and regional areas.

Thus, for purposes of AfCFTA sustainability, AfCFTA implementation mechanisms should: integrate inclusive and participatory decision-making process; retain policy space for national interests; and extend AfCFTA benefits to all society groups—women, youth, people with disabilities, and Micro, Small and Medium Enterprises (MSMEs)—without comprising the sustainability of environmental resources.

Africa is currently at a risk of reaching the zenith of bilateralism/regionalism in terms of the number of regional trade agreements (RTAs) present in the continent. Yet the advantages of close economic integration have not yet been adequately witnessed in African Regional Trade Agreements (RTAs). Moreover, it is generally the case that each African state is a member to at least two or more RTAs. This has created the quintessential spaghetti bowl on the continent.

The AfCFTA, as presently negotiated, fails to address the potential tax avoidance likely to arise from the proposed single market. The tax-related non-tariff barriers mentioned in the AfCFTA are limited to subsidies and tax benefits granted by governments to countries. In the absence of any express provision on the allocation of taxable income among countries in the AfCFTA, it may be argued that the AfCFTA has adopted the global tax system, which treats companies in a group as separate from each other.