At the Global Africa Business Initiative (GABI) event held in New York last September, amidst the hustle of the UN General Assembly, Africa’s wealthiest entrepreneur, Aliko Dangote, candidly shared a challenge that many African business leaders face. Despite investing over $600 million in one African country, Dangote still required a visa to enter, a sentiment he voiced again during the Africa CEO Forum in Kigali earlier this year. He expressed his frustration about needing to apply for 35 separate visas for travel within the continent, underscoring a key barrier that stifles intra-African trade.
Dangote’s experience is not unique. For many African business leaders, the cumbersome visa restrictions create significant obstacles. Currently, intra-African trade stands at a modest 17%, far behind Europe’s robust 60% trade within its borders. The African Continental Free Trade Area (AfCFTA), launched in 2018, holds the promise of increasing this trade by integrating a market of 1.3 billion people with a combined GDP of $3.4 trillion. The World Bank has estimated that the AfCFTA could potentially boost Africa’s income by $450 billion by 2035, with the capacity to lift 30 million people out of extreme poverty.
This ambitious trade agreement could also help to ease Africa’s growing debt burden, currently around $1.1 trillion, by expanding the tax base, according to the Brookings Institution. Wamkele Mene, Secretary-General of the AfCFTA Secretariat, shared positive updates at the GABI event, noting that 54 African Union (AU) member states have signed onto the agreement, and 48 countries have already ratified it. However, despite these advances, significant challenges remain.
A critical hurdle to the success of the AfCFTA is the free movement of people. In 2023, a joint study by the African Union (AU) and the UN Economic Commission for Africa (UNECA) concluded that the unrestricted movement of people across the continent is essential for trade and economic integration. Yet, only four African countries Benin, The Gambia, Rwanda, and Seychelles currently offer visa-free entry for all African citizens. Many countries still impose strict visa requirements, with 30 nations requiring visas for citizens from more than half of Africa’s countries. The situation is a stark reminder of the ongoing challenges in realizing the potential of the AfCFTA.
African leaders have expressed their commitment to easing mobility restrictions, as evidenced by the AU’s Agenda 2063, which envisions a prosperous and integrated Africa. In 2018, the AU adopted a protocol on free movement of persons to complement the AfCFTA’s goals. However, the protocol has been slow to take effect. While 32 countries have signed the protocol, only four Mali, Niger, Rwanda, and São Tomé and Príncipe have ratified it. This delay prevents the free movement of people from being fully realized under the AfCFTA framework.
Why are some countries reluctant to adopt the free movement protocol? The AU-ECA study points to a lack of awareness about the economic benefits that free movement could bring, including improved labor mobility, knowledge transfer, and better market access. Additionally, many countries lack the infrastructure to manage migration flows effectively and fear the potential strain on public services like health and education.
Visa fees also remain a significant revenue stream for many African countries, and eliminating them could temporarily strain national budgets, even though the long-term economic benefits could outweigh this short-term loss. Furthermore, the lingering effects of the COVID-19 pandemic have heightened concerns about health risks posed by unrestricted travel, further complicating the situation.
Despite these challenges, there is growing optimism around the AfCFTA’s success. The AfCFTA’s Guided Trade Initiative (GTI), which started in 2022 with just seven countries, has expanded to 39, including economic powerhouses like South Africa and Nigeria. This initiative is helping to test the legal and operational frameworks of the AfCFTA, and its success could pave the way for broader integration goals, including the free movement of people.
Moreover, the Pan-African Payment and Settlement System (PAPSS), launched by the AfCFTA Secretariat and the African Export-Import Bank (Afreximbank), is helping to facilitate cross-border payments in local currencies, reducing the cost of currency exchange for businesses and entrepreneurs.
While challenges remain, the path forward looks promising. As regional economic communities like the East African Community (EAC) and the Economic Community of West African States (ECOWAS) continue to demonstrate successes in integration, the broader AfCFTA framework can learn from these experiences.
The launch of the pan-African passport in 2016 also holds promise for improving mobility across the continent. This initiative aims to ease travel restrictions, especially for women traders, who make up around 70% of informal cross-border trade and often face significant barriers at border crossings.
In the long run, the AfCFTA’s potential for transforming Africa’s trade landscape is undeniable. With strong legal frameworks, growing initiatives like the GTI and PAPSS, and a more integrated regional approach, the dream of a more connected and prosperous Africa is becoming increasingly achievable. However, as Mene emphasized, continued efforts to ease restrictions on the movement of people are critical to unlocking the full potential of the AfCFTA.
