Monrovia — Liberia, an ECOWAS member state where importers mostly experience high tariffs on goods, which lead to inflation of prices on the local market, is yet to ratify the Africa Continental Free Trade Area (AfCFTA).
The agreement has been signed by 54 of the 55 African Union member states, with 44 countries depositing their instruments of ratification. However, Liberia, which signed the AfCFTA document on March 21, 2018, is yet to ratify.
The AfCFTA is a trade agreement with a comprehensive scope that includes critical areas of Africa's economy, such as digital trade and investment protection. It became operational on January 1, 2021, with an objective to significantly boost intra-Africa trade by eliminating barriers to trade in Africa.
"If Liberia does not ratify the AfCFTA, it means Liberia is no longer a state party. Therefore, Liberia will not benefit from preferences negotiated within the agreement," said Dr. Olu Alaba, an expert on trade.
Speaking last December at the AfCFTA training for African journalists, including Liberia, in Abuja, Nigeria, Dr. Alaba listed Liberia as the only country that has yet to fulfill its trade obligations.
"Ratification will legally give Liberia the leverage to export to ECOWAS countries tariff-free and have other countries export to it as well under similar privileges. But if Liberia does not ratify, it means the country has not formally consented to the agreement and would not benefit from cross-border trades," he said.
Highlighting the benefits that Liberia would have when the AfCFTA is ratified, Dr. Alaba said that AfCFTA is customized to eliminate all cumbersome processes at the borders and eliminate tariffs on substantial components of intra-continent trade.
"It will help traders reduce the time and costs of doing business, which will finally lead to a reduction in the cost of goods and services leading to the achievement of food security," Dr. Alaba said.
Dr. Alaba further added that Africa is composed of 55 countries, 1.2 billion populations, and 3.4 trillion USD in GDP. However, intra-Africa trade remains very low at between 14% and 15% as compared to exportation to the rest of the world, including oil, minerals, and cocoa that is at a higher percentage. Therefore, the AfCFTA is meant to increase intra-Africa trade and provide the necessary negotiating strength in large trade negotiating forums like the World Trade Organization.
As to why Liberia has not ratified the AfCFTA agreement since 2018, the Ministry of Commerce and Industry was slow in answering since the beginning of the year, but recently Minister Mawine G. Diggs said the AfCFTA Agreement is currently being deliberated on at the National Legislature. Her ministry is engaged with the Legislature to ensure the passage of the agreement.
"The Government of Liberia, through the Ministry of Commerce and Industry, has conducted several stakeholder engagements on a National Strategy for the AfCFTA with the support of local consultants and funding from the United Nations Economic Commission for Africa (UNECA)," Minister Diggs said.
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She further stated that the local consultancy has developed the AfCFTA National Strategy for Liberia, which is expected to be validated by key stakeholders across the country, including Liberian businesses. The goal of the local consultancy is to have a strategy or implementation roadmap in anticipation of the passage of the AfCFTA by the National Legislature, she added.
"The Government of Liberia is fully supportive of the AfCFTA Agreement due to its huge trade benefits for Liberian businesses, particularly those involved in cross-border trade. The Agreement, when ratified by the National Legislature, will open up new markets across Africa, providing access to markets that have long taken a toll on SMEs and regional integration through trade. The AfCFTA will lead to a reduction of tariffs on goods and lessen restrictions on Liberian service providers in other AfCFTA member countries," she concluded.
While time is running out for Liberia, Dr. Alaba stressed the impacts the AfCFTA would have on Liberia if it ratified the Agreement, including cooperation on investment, competition, and intellectual property components of the AfCFTA. The following listed are capable of attracting investment into Liberia's areas of competitive advantage to expand production and trade in those countries across Africa.
"For countries that may be negatively affected by reduced tariff revenue, compensation funds would be created by ECOWAS to address their losses," he said.
