Intra-African trade stood at 14.4% in 2020 as compared to 45% under the EU for the same period. The latest report by Afrexim Bank, on intra Africa trade states that trade is on the rise standing at USD 193.17 billion in 2022 which represents an increase of 18.6% from 2021’s figure of 13.4%. However, despite the milestones achieved thus far, Africa is still facing a lot of challenges such as regional integration, lack of customs unions, political instabilities and more. The AU recently launched one of the most ambitious programs called AfFCTA that will look to create a common market for Africa. This essay aims to delve into the importance of common external tariffs in regional integration and how it is important to achieving the objectives of the AfCFTA.

The AU’s vision, Agenda 2063, to accelerate economic growth and development for the continent through the creation of a single market for Africa and achieving revenue increase to a tune of USD 450 Billion by 2035 is anchored on the establishment of the African Continental Free Trade Agreement-AfCFTA. The AfCFTA is an ambitious AU flagship established in May 2019 and effected in January 2021. Its primary objective is to strengthen intra African trade and put Africa on the global stage. However, even though it is ambitious, the AfCFTA does not give guide on how a common market for Africa will be realised. The continent right now has eight regional economic communities (RECs) namely ECOWAS, EAC, COMESA, SADC, AMU, CEN-SA, ECCAS and IGAD. With the current RECs, intra African trade within the communities is still really a big challenge. Now if with the RECs intra African trade is proving to be difficult, how then can we achieve a single market and trade efficiently amongst ourselves like the EU and other Western economic communities?

The AU has come a long way in putting efforts to achieve a common market for the continent and fostering economic growth and development. Africa as a continent boasts of having the youngest age in population averaging 18.8 years, which is way too low as compared to the global average age of 30 years. The literacy levels as of 2022 stood at 67.4%. These figures show great hope that Africa has a huge potential to create the biggest single market in the world in terms of GDP. There have been several treaties to achieve economic growth for the continent, but none stands out as the Abuja Treaty of 1991. The Abuja Treaty of 1991 set the tone by looking at ways to establish the African Economic Community (AEC) with the aim of fostering the social, economic, and cultural development of the African continent through the integration of the economies of various countries. Although the AU and member states failed to actualize its intended purpose, the treaty pioneered the formation of AfCFTA which we are talking about today. Under the Abuja Treaty, the focus was on creation of integrated regional economic communities (RECs) such as SADC, EAC, ECOWAS and so forth. Once the RECs were created, customs unions will be needed to foster trade within the various created RECS and deepen the integration.

Among the challenges right now facing almost all the regional economic communities (RECs) on the continent is bureaucratic red tape. How then can we eliminate this challenge to smoothen trade within the communities? The answer to this question is in the creation of customs unions as proposed in the Abuja Treaty. Why do we need Customs Unions? – Customs unions govern common external tariffs, which are a key component in trade agreements between countries. Through common external tariffs the RECs can establish a common set of tariffs for goods imported from outside the REC while allowing free trade among member countries. Customs unions offer an intermediate step between free-trade zones and common markets, providing a balance between protecting domestic producers and reducing consumer costs. The main goal of customs unions is to limit external influence, liberalize intra-regional trade, promote economic development and diversification within the REC, and provide durability in trade by ensuring that tariffs are constant and policies affecting import tariffs cannot be changed arbitrarily. This helps attract foreign direct investment, enlarge the domestic market for imported goods, increase economies of scale, and boost productivity.

Currently the continent has six customs unions and yes, they are not perfect, but structures and systems are in place for at least most of them. If we take SACU for example, which is the oldest customs union in the world, the union can be integrated in SADC to ensure the southern economic community has a customs union. The AU with the help of EU who are our foremost trading partner can conduct operational audits on each customs union in the various RECs on the continent and look to build and strengthen capacity. Once we have functioning systems in regional communities then slowly, we can transition into setting up an AU customs union under the AfCFTA agreement to fully integrate.

In conclusion, the significance of having customs unions cannot be overlooked. The AU and African leaders need to introspect and call upon all stakeholders especially the academicians, the private sector, and civil societies to participate in this cause. To do this, there is need by the AU to push for the establishment of the African Economic Forum which will be a platform to allow the above mentioned participate.

About the Author

Joseph Mambwe Mwenda is an experienced and accomplished Business and Commercial Strategist. Prior to coming to pursue my master’s programme at UWC, I spent 15 years in the banking sector in Zambia spearheading various projects in retail banking and 4 years as Managing Partner with Estmat Investments Ltd that is involved in mining contracts services and consumables’ supply.

Joseph Mambwe Mwenda holds a BCom Hons in Marketing Management from Management College of South Africa, BSc in Marketing from Copperbelt University, Zambia, a Diploma in Marketing from Evelyn Hone College, Zambia and a certificate in Sales and Selling Management from the London Chamber of Commerce and Industry, UK. My academic focus lies in finding ways to strengthen African financial systems and build market confidence to ensure sustainable development.