Trade Liberalisation and Free Markets in Western and Southern Africa - How Sustainable is AfCFTA?
As a prelude to the African Continental Free Trade Area (AfCFTA) treaty, countries are assessing the implications of significantly reducing the prevailing tariffs. On the one hand, it is unclear what the relative effects of the reduction would be. On the other hand, this treaty raises three pertinent questions. What is the validity of AfCFTA for the continent’s growth in the long run? Should regional blocks liberalise trade to others on all goods or select unilateral trade arrangements? What should AfCFTA’ s trade strategy be, in the face of the growing trade barriers of industrialised countries? This article evaluates the sustainability of AfCFTA, using the ECOWAS and SADC blocks as case studies, and employing the cointegration technique for analysis. The results indicate no significant relationship between trade liberalisation and long-run economic growth in both regions. Consequently, unrestrained trade openness could have negative consequences for the growth of local businesses and government revenue in both regions. Measured liberalisation steps are thus recommended for each regional individual block.