AfCFTA Youth Research Paper

How youth involvement in the AfCFTA process could lead to a successful implementation of the continental agreement Chijioke Iwuamadi, Sophia Gallina, Rizzan Nassuna & Teresa Fellinger*

RESEARCH PAPER * All the authors are staff of GIZ Office to the AU in Addis Ababa and team members of the GIZ project on Strengthening Good Governance and Human Rights in Africa – AGA. The views presented are those of the authors and do not necessarily reflect the views of GIZ. RESEARCH PAPER: AFCFTA YOUTH

Linkoping House 27 Burg Road Rondebosch 7700 Cape Town T +27 (0) 21 650 1420 F +27 (0) 21 650 5709 E mandelaschool@uct.ac.za www.mandelaschool@uct.ac.za The Nelson Mandela School of Public Governance at the University of Cape Town is grateful for funding provided by the Carnegie Endowment for International Peace, to conduct the research, which led to the publication of this working paper.

Design: Mandy Darling, Magenta Media

Contents 1. Introduction .......................................................................................................................... 2 2.

Trajectory of the aims of the AfCFTA Agreement.......................................................... 3

3. Anticipated Outcome of the AfCFTA, and Implementation Strategies...................... 4 4. Youth involvement in the AfCFTA Agreement Implementation Process: The Gap.................................................................................................................................... 6 5. Implications of inadequate involvement of youth for successful implementation of the AfCFTA .......................................................................................... 7 6.

Conclusion .............................................................................................................................. 8

References........................................................................................................................................ 9

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1.

Introduction

The African Continental Free Trade Area (AfCFTA) agreement is a metaphor for Africa’s economic integration and development aspirations, which began in 1963 with the formation of the Organisation of African Unity (OAU) and morphed into the African Union (AU) in 2000. The coming into force of the AfCFTA in 2019 is no doubt a laudable accomplishment by African countries, for various reasons. In particular, the successful implementation of the AfCFTA agreement is expected to address issues of youth unemployment and help actualise Agenda 2030 and Agenda 2063, “The Africa We Want”. With regard to global description of the continental initiative, the United Nations Economic Commission for Africa (UNECA) and the World Trade Organization (WTO) reported in 2019 that the AfCFTA agreement was the largest trade agreement to take effect since the establishment of the WTO. There are assertions that the AfCFTA agreement will benefit African youth immensely by catalysing youth employment in Africa.

How this might happen remains a concern of development partners and other relevant stakeholders across state and non-state actors on the continent. Lungu (2019) notes that the AfCFTA, if properly implemented, could boost employment: the resulting regional integration – in the form of regulatory alignment of labour standards and the free movement of peo-

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ple – may help mitigate labour displacements across sectors. However, trade liberalisation will not automatically translate into developmental outcomes (UNECA & WTO, 2019).

Young people occupy a critical place in the political economy of Africa, and the success of many continental initiatives such as the AfCFTA agreement would depend mainly on the extent to which the youth are mainstreamed in the various stages of the implementation of such initiatives.

This is largely because Africa is a youthful continent, with youth constituting over 60% of the continent’s population. The United Nations Department of Economic and Social Affairs in 2015 reported that Africa accounted for 19% of the world’s total youth population and is projected to account for 42% of the world’s youth population by 2030. Furthermore, Africa’s under-35 population makes up about 75% of the continent’s population (UNESCO, n.d.). One implication of this young population is the potential job creation challenges on the continent, especially as the labour force is projected to reach about one billion by 2030. Against this backdrop, this paper examines how youth involvement in the AfCFTA process could lead to a successful implementation of the continental agreement, which sets out to create more jobs in Africa.

2.

Trajectory of the aims of the AfCFTA Agreement

The agreement establishing the AfCFTA was opened for signature on 21 March 2018 (AU, 2018). A commendable level of commitment has been demonstrated by member states since signing the agreement.

The AfCFTA agreement entered into effect on 30 May 2019, the final step before operationalisation. On 7 July 2019, the operational phase of the AfCFTA was launched, instituting the five operational instruments governing the AfCFTA: the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system; and the African Trade Observatory. As of 6 May 2020, all but one African country (Eritrea) have signed the AfCFTA agreement (Apiko et al, 2020), 30 countries have met domestic conditions for the AfCFTA ratification, and 28 of these countries have deposited their ratification instruments with the depository of AfCFTA (PricewaterhouseCoopers, 2020). The African Union Commission (AUC) inaugurated the AfCFTA Secretariat in Accra, Ghana, in August 2020. Following the global crisis brought on by the COVID19 pandemic, the start of trading was postponed from 1 July 2020 to 1 January 2021 (Apiko et al, 2020). As of 4 October 2021, the Trade Law Centre (TRALAC) announced that 38 countries had deposited their instruments of ratification with the Chairperson of the AUC, making it possible for the AfCFTA to take effect.

b. Create a liberalised market for goods and services through successive rounds of negotiations. c. Contribute to the movement of capital and natural persons, and to facilitate investments building on the initiatives and developments in the State Parties and Regional Economic Communities. d. Lay the foundations for the subsequent establishment of a Continental Customs Union. e. Promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties. f. Enhance the economic competitiveness of the State Parties within the continent and on the global market. g. Promote industrial development through diversification, regional value chain development, agricultural development and food security. h. Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

The AfCFTA agreement consists of eight general objectives: a. Create a single market for goods and services facilitated by the movement of persons, in order to deepen the economic integration of the African continent and in accordance with the Pan African Vision of “an integrated, prosperous and peaceful Africa” enshrined in Agenda 2063.

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3. Anticipated Outcome of the AfCFTA, and Implementation Strategies The implementation of the AfCFTA agreement involves three phases: Phase 1 concerns the trading of goods and services; Phase 2 deals with investment, competition policy and intellectual property rights; and Phase 3 covers the e-commerce negotiations that are expected to take place after a year of capacity-building. As observed, Phase 1 has been completed with the exception of two issues: Schedules of Tariff Concession and Rules of Origin. These outstanding issues require negotiation for trade under the African Continental Free Trade Area (AfCFTA) in order to begin.

The AfCFTA is expected to facilitate trade in goods and services through the free movement of persons, in order to promote and expand economic integration in line with the AU Agenda 2063. Phase 2, which is still ongoing, includes protocols on competition policy, investment and intellectual properties (PricewaterhouseCoopers, 2020). Phase 3, which is yet to begin, will focus on e-commerce negotiations (UNDP, 2020).

At the institutional level, the framework for the implementation of AfCFTA provides for a Secretariat (now established in Accra, Ghana) which coordinates the implementation of the AfCFTA agreement.

The Secretariat is made up of the Assembly, Council of Ministers and Committee of Senior Trade Officials. The Secretariat liaises with the Regional AfCFTA Committee and the National AfCFTA Committees.

Apparently, the institutional arrangement of the AfCFTA at inception has not made specific provisions for youth representation and involvement.

In the area of African industrialisation and the diversification of African economies, the AfCFTA is expected to create a CFTA for goods and services in Africa, and liberalise and facilitate the free movement of

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people, investments and businesses across the continent (PricewaterhouseCoopers, 2020). The immediate direct benefits of the AfCFTA are anticipated to come from the reduction in tariffs and non-tariff barriers (NTBs) by Member States, and from the establishment of a continental framework for trade in goods and services. Thus, it is expected that the AfCFTA will connect 1.3 billion people across 55 African countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.

Implementing the AfCFTA agreement is expected to increase the volume of intra-African trade by 81% by 2035 as well as to increase the total volume of African exports by 29% (World Bank, cited in Apiko et al, 2020). This increase in intra-African trade is expected to drive Africa’s structural transformation (as manufacturing is expected to gain the most), with an increase in intra-Africa manufacturing trade and manufacturing exports to the rest of the world rising by 46%. Implementation of the AfCFTA could also have a positive effect on foreign direct investment (FDI) as foreign investors venture to tap into the continental market, diversifying investments beyond the traditional extractives sector (AfDB, cited in Apiko et al, 2020).

In the area of livelihoods, implementing the AfCFTA agreement could increase the wages and income of African workers and businesses. Free trade driven by the AfCFTA is also expected to address gender inequality in Africa by increasing employment opportunities for women and helping to lower the gender wage gap on the continent. A recent study by the African Peer Review Mechanism (APRM) (2021) observed that, by facilitating the movement of goods and services between African countries, the AfCFTA will cre-

ate opportunities for women in informal cross-border trade, especially as informal cross-border trade constitutes a major form of informal activity in most African countries. This further supports the report by UNECA and WTO in 2019, which estimated that informal cross-border trade contributes 30-40% of trade in the intra-Southern African Development Community (SADC). Notably, 70% of informal cross-border traders are women (UNECA & WTO, 2019). As a result, the AfCFTA is also expected to impact women-owned businesses, improve sustainable livelihood and standard of living through job creation, and improve access to market across the continent.

Moreover, the AfCFTA agreement has been presented as Africa’s stimulus package to address the devastating impact of the COVID-19 pandemic ravaging the African economies. Increasing trade through the AfCFTA is also hoped to provide the impetus for reforms that boost productivity and job creation, further reducing poverty. By 2035, implementing the agreement could help to lift an additional 30 million people out of extreme poverty and 68 million people out of moderate poverty. Despite the laudable promises of the AfCFTA, successful implementation of the continental agreement depends largely on variables such as the extent of youth involvement in the AfCFTA processes.

Scholars

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4. Youth involvement in the AfCFTA Agreement Implementation Process: The Gap The African Union (AU) Youth Charter defines youths as people between the ages of 15 and 35 years old (AU Youth Charter, 2006). Africa is currently experiencing a youth bulge.1 In 2015, the population of youth aged 15-24 in Africa stood at 226 million, accounting for 19% of the youth population globally. Over the next 35 years, Sub-Saharan Africa (SSA) is expected to have a higher youth-to-population ratio.

The region is still on the upward slope of a youth bulge: the youth population is estimated to increase until 2030, when 20% of the population will be between the ages of 15 and 24, while 28% will be between the ages of 15 and 29. Within SSA, West and Central Africa will continue to have high youth shares until 2050 (AfDB, 2015).

design of the initiative, which did not make provisions for youth as active stakeholders in the AfCFTA implementation. The study further revealed that knowledge of young people in Africa on the AfCFTA is very low and their capacity hangs in the balance.

Moreover, there is a lack of documentation and profiling of African youth-led businesses, which is perceived to be a key area that will require intervention by policymakers, development partners and other actors involved in the implementation of the AfCFTA agreement.

In recognition of the strategic position of youth in deciding Africa’s future, the AU Agenda 2063 mainstreamed the youth in its implementation strategies towards actualising “The Africa We Want”. Specifically, Aspiration 6 of the AU Agenda 2063 identified engagement and empowerment of the youth as a priority area. Although the AfCFTA aligns with the AU Agenda 2063, especially as it is one of the AU flagship initiatives, it has yet to adequately recognise the youth as critical for the success of the implementation of the continental agreement. The findings from a study by the MS TCDC/YouLead Secretariat in Arusha, Tanzania revealed that the AfCFTA agreement presents an abundance of promises for young people. However, youth involvement in the implementation process was lacking due to structural constraints in the

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The term “youth bulge” was coined by Fuller in 1995 and is used to refer to a situation where the population share of young people aged 15-24 years exceeds 20% and share of children aged 0-14 is higher than 30% (Schomaker, 2013).

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5. Implications of inadequate involvement of youth for successful implementation of the AfCFTA The phased implementation of the continental agreement did not recognise the involvement of youth in the entire process.

For instance, no specific framework was put in place to address skill gaps among the youth, to prepare them to compete effectively in the large market that Africa would be transformed into and in the global economy that Africa would be integrated into (with the complete implementation of the AfCFTA). Young people expressed that the non-involvement of youth in the AfCFTA processes meant that the youth population, which constitutes the majority on the continent, are alienated from charting the future of the continent.

One direct implication of limited or no involvement of youth in the AfCFTA processes is that the dreams of industrialisation, diversification and enhancing the competitiveness of Member States – as enshrined in Articles 3(f & g) of the AfCFTA agreement – may be jeopardised.

Africa currently abounds in unskilled and unemployed youth. As rightly pointed out by the UNECA and WTO in 2019, in order to benefit from the offerings of the AfCFTA, individuals entering the workforce require the necessary skills to gain employment in a growing industry, and the flexibility to choose a sector based on the availability of opportunities. Moreover, producers, individuals (or companies) will need to have access to adequate productive assets in order to be able to meet the demand for their products and move up in the value chain, as and when new opportunities arise (UNECA & WTO, 2019).

The youth in Africa lack the skills, adequate knowledge and productive assets required to tap into the offerings of the AfCFTA, implying that the youth will be unable to contribute to the full realisation of the AfCFTA’s objectives. This is because the youth who should make up the workforce

will remain unskilled with vast untapped potentials, given that the AfCFTA gives no specific attention to skill development and education for the youth (as emphasised in Aspiration 6 of the AU Agenda 2063).

Furthermore, the limited attention that the AfCFTA gives to investment in youth (through direct involvement of youth in its processes) means that the continent will not reap the demographic dividend that is expected to drive future industrialisation, diversification and overall development of African economies. As noted by Apiko et al (2020), improving digital connectivity is critical for boosting intra-African trade under the AfCFTA. Thus, if the youth as key purveyors of digital connectivity are not involved in the AfCFTA processes, the effective and successful implementation of the continental agreement – particularly in the areas of reducing transaction costs and barriers to cross-border trade – may be undermined.

Apparently, the failure to involve youth (through an emphasis on investment in youth empowerment) will deepen poverty among the youth and thwart the realisation of Article 3(e) of the AfCFTA, which aims to promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties. According to UNECA and WTO (2019), young people in Africa may not be able to access the full range of opportunities created by the AfCFTA, and are more likely to resort to finding employment in the informal sector, or remain under-employed or unemployed.

This failure to involve youth also has implications for peace and security across the continent, especially the possibility of youthled violent social movements and unrest.

Such unrest would, in turn, undermine the growth of foreign direct investment, free movement of persons and goods.

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6.

Conclusion

The coming into force of the AfCFTA agreement is a milestone achievement towards the actualisation of Africa’s aspiration to become an economically integrated and developed continent. Apparently, the AfCFTA holds enviable promises, ranging from increased trade, industrialisation, diversification and improved livelihoods on the continent at large. However, it appears that no tangible framework has been put in place to involve the youth in the implementation of the AfCFTA. Given the strategic place of the African youth on the continent, their inadequate involvement in the AfCFTA implementation would likely jeopardise successful diversification of the African economies, enhanced competitiveness of the economies and many other objectives of the agreement.

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In sum, there must be a collective approach and responsibility towards actualising “The Africa We Want”, especially within the AfCFTA agreement implementation framework, which should emphasise youth inclusion. In other words, there is a need for stronger partnership and effective collaboration among the AUC, the AfCFTA Secretariat, the Office of the African Union Youth Envoy, and the AU Women, Gender & Youth Directorate, member states, civil society, and youth hubs and agencies, to work closely in amplifying the benefits of the AfCFTA agreement and to foster youth engagement and participation in the process.

References African Union Youth Charter adopted in July 2, 2006, 7789-treaty-0033_-_african_youth_charter_e.pdf (au.int) African Development Report 2015 Growth, Poverty and Inequality Nexus: Overcoming Barriers to Sustainable Development.

See p.117 of Chapter 5 Africa’s youth in the labour market. ADR15_chapter_5.pdf (afdb.org) African Union (2018). Agreement establishing the African Continental Free Trade Area. African Union. https://au.int/sites/ default/files/treaties/36437-treaty-consolidated_text_on_cfta_-_en.pdf APRM. (2021). A study on the opportunities in the African Continental Free Trade Area (AfCFTA) for women in the informal cross-border trade. Report (English version) released in December 2021 by the African Peer Review Mechanism. African Peer Review Mechanism - APRM (aprm-au. org)

Apiko, P., Woolfrey, S., & Byiers, B. (2020).

The promise of the African Continental Free Trade Area (AfCFTA) (Discussion Paper. No. 287). The European Centre for Development Policy Management (ECDPM). https://ecdpm.org/wp-content/ uploads/Promise-African-Continental-Free-Trade-Area-AfCFTA-ECDPM-Discussion-Paper-287-December-2020.pdf Lungu, L. (2019). A Fresh Chance for Africa’s Youth: Labour Market Effects of the African Continental Free Trade Area (AfCFTA) (GIZ-AU Briefing Paper).

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Bonn. https://www.econstor.eu/bitstream/10419/195255/1/A%20Fresh%20 Chance%20for%20Africa%27s%20 Youth%20-%20Labour%20Market%20 Effects%20of%20the%20AfCFTA.pdf

MS TCDC/Youlead Secretariat (2021).

Making the AfCFTA promises a reality for African Youth: A continental study on capacity gaps, policy constraints and prospects of youth inclusion in AfCFTA (Report released on 4 November 2021).

MS Training Centre for Development Cooperation, Arusha, Tanzania.

PriceWaterhouseCoopers. (2020). COVID19 and the African Continental Free Trade Area Agreement. https://www.pwc.com/ ng/en/pdf/covid19-key-considerations-afcfta.pdf Schomaker, R. (2013), Youth bulges, poor institutional quality Middle East and North Africa and missing migration opportunities - triggers of and potential counter-measures for terrorism in MENA (Middle East and North Africa). Topics in Middle Eastern and African Economies Vol. 15, No. 1, May 2013. 1 (luc.edu) UNDP. (2020). The futures report: Making the AfCFTA work for the women and youth. United Nations Development Programme. https://www.africa.undp.org/ content/rba/en/home/library/the-futuresreport--making-the-afcfta-work-for-women-and-youth.html UNECA & WTO. (2019). An inclusive African Continental Free Trade Area: Aid for trade and the empowerment of women and young people. United Nations Economic Commission for Africa. https:// www.wto.org/english/tratop_e/devel_e/ a4t_e/gr19_e/a4treporteca2019_e.pdf UNESCO. (n.d.). Statistics on youth. http://www.unesco.org/new/en/unesco/ events/prizes-and-celebrations/celebrations/ international-days/world-radio-day-2013/ statistics-on-youth/#topPage

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