Trade within Africa has now become easier and cheaper with the passage of the African Continental Free Trade Agreement.

A s globalization connects the world, there continues to be a demand for trade efficiencies. One way trade efficiencies are advanced is through regional free trade agreements that allow movement of goods, services, and people. With a regulatory framework in place, adoption and the widespread use of the latest technological innovations in law and artificial intelligence will deliver transactions in the most efficient and cost-effective manner. This blog post discusses the African Continental Free Trade Agreement, the legal implication of its impact on trade, and how legal technology and artificial intelligence can offer a technological leap for African trade.

I. African Continental Free Trade Agreement

Commercial fishermen now have the ability to sell their seafood throughout the Continent with the help of AfCFTA.

The African Continental Free Trade Agreement (AfCFTA) was signed in Kigali, Rwanda on March 21, 2018, and has been ratified by the required 22 African countries.

Based on the World Trade Organization trade agreement, experts believe AfCFTA can double intra-African trade by 2022 and is expected to cut tariffs on 90% of goods traded within the continent. AfCFTA will also help the continent in global trade negotiations and could lead to establishing African financial institutions. AfCFTA will create a single market for goods and services: by progressively eliminating tariffs and non-tariff barriers for trade in goods and progressively liberalizing trade in services. The investments and consumer spending for the AfCFTA are expected to attract an estimated $4 trillion. In addition to the movement of goods and services, AfCFTA encourages the free movement of people, the right of residence, the right of establishment, and the African Passport.

Once ratified, AfCFTA offers lush fields of opportunity and potential as entrepreneurs and governments navigate the legal implications on trade.

II. Legal Implications on Trade

The legal impact on AfCFTA cannot be understated as African countries will need to collaborate in order for the trade agreement to have sustainability. Cross border transactions will have an array of legal implications as intra-African trade increases including minimizing or avoiding double taxation, determining which country’s law will control the terms of the contract, and monitoring rules for the origin of goods.

Farmers throughout Africa can now sell their wine within Africa without paying expensive tariffs and duties.

As contract terms and trade matters are disputed, countries will need to resolve tariff and anti-dumping matters in front of the AfCFTA Dispute Settlement Body. This settlement board, comprised of Member State representatives, has a greater chance to minimize macro-level corruption as the rulings will require consensus.

Minimizing corruption on the local level will also be critical as the free movement of individuals increase the interactions between citizens and residents of the African nations. While the concerns of free movement of people are legitimate, increased remittance and tourism are a real positive of an African Passport. The use of technology can offer additional benefits and trade efficiencies.

III. Legal Technology and Artificial Intelligence

Machines and mechanisms can be traded throughout the Continent at cheaper rates due to AfCFTA.

An often overlooked result of AfCFTA allows Member States and its entrepreneurs to take advantage of the latest technological advantages. Elements of law can be advanced through the use of five technological innovations: artificial intelligence, machine learning, blockchain’s smart contracts, internet of things, and natural language processing.

Artificial intelligence, machine learning, and natural language processing can all be combined to create legally binding contracts while minimizing time and reducing costs, which will increase trade transactions. Computable contracts can monitor contract terms without the need for humans. Blockchain’s smart contracts combined with the internet of things can eliminate the need for middlemen and thereby increase trust and transactions. All of these technologies require the collection and analysis of data. Due to the lack of ubiquitous electricity and internet access, the African consumer is not as well known as consumers on other continents. This provides an opportunity for the development of data pools that can be leveraged across many industries.

Coders and innovators can create startups to make AfCFTA related transactions cheaper and more efficient.

AfCFTA is a considerable opportunity for Africa, and with the inclusion of ethical and transparent legal technology, transactions can be cheaper, faster, and more accurate than the current status.

Geremy Johnson, Esq.

gj@geremyjohnson.com