African Countries Have Been Busy

Major progress has been made towards a continental free trade area and a liberalized air transport market.

We are all still reeling from Trump’s Anti- Africa comments. Contrary to his statement, many African countries are vibrant economies full of innovation and the continent is on the move. Alternate and more productive narratives for the continent are important so here is some of what you you need to know:

The African continent is making quick progress towards finalizing the Continental Free Trade Area (CFTA), a trade agreement among 55 African countries with a total population of over 1.2 billion. Negotiations for a liberalized air transport market are also underway. The Single African Air Transport Market (SAATM) will redefine carrier rights and set up institutions for increased flight safety and customer satisfaction. Negotiations for both projects will culminate at the upcoming African Union Heads of State Summit later this month in Addis Ababa.

The aim of the CFTA is to directly increase intra africa trade by i) opening borders to create trade networks for the free movement of goods and people ii) making it easier for businesses to access finance iii) providing a governance and institutional framework to facilitate cross border trade. Through an increase in trade, it is expected that the African economies would have the opportunity to transform their economies and alleviate poverty.

SAATM is an equally exciting project. It aims to provide all airlines, regardless of ownership, increased rights to fly over national territories which would mean increased airline fare competition, more intra-african airline flights and spillover effects for trade and industry as air cargo markets open up. Done correctly, a single African airline market would provide attractive investment opportunities in a fast growing market of African travellers. Jobs will be created and economies could potentially see economic boosts from increased tourism.

The African Union’s proposed Single Africa Aviation market could provide some hope for the industry. African airlines and transport companies would enjoy a fully liberalized intra-Africa air market with no restrictions on ownership. More importantly airlines will be able to establish flight routes that originate and end in the airlines home country. This is a win win for airlines and consumers- airlines benefit from lower costs of operations and consumers will hopefully enjoy lower airfares.

Even more good news for consumers is SAATM’s provisions for consumer protection regulations that should ideally lead to better travel experiences. African airlines can also expect stronger regulations on industry competition and more direct channels for dispute settlement. An interesting part of SAATM is its eligibility criteria for African community carriers, i.e airlines owned by African nationals.This is different from past aviation policy mainly built on state ownership and management of airlines and represents a direct effort by the AU to support and enhance the quality of private African airlines.

Both project sound great on paper but the biggest challenge would be implementation. As with any other major policy project, shifting politics are a risk. With 55 countries at the table, there is no guarantee that every newly elected government would see CFTA and SAATM as worthwhile arrangements. This is where the AU’s leadership would be important. Success would depend on a stable and predictable economic and politic climate with full and continued support of African nations. Additionally, a commitment to creating the enabling environment for the public and the private sectors to flourish under new rules and institutions would be critical .

Despite the excitement, African nations and policy stakeholders have not discounted the potential of liberalization, in both cases, to undermine equity, justice and fairness. Alongside technical negotiations, leaders and policy experts are strategizing on ways to prioritize social protection to ensure a prosperous future for all. This is important for crafting sustainable policy and should remain a priority as these projects move forward.

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