AfCFTA: How can businesses navigate the legal and regulatory hurdles?

The African Continental Free Trade Agreement (AfCFTA) has sparked optimism and uncertainty among businesses operating on the continent. With the potential to transform the economy of the continent through increased market access and foreign direct investment, the AfCFTA represents the largest free trade agreement since the creation of the WTO, encompassing a market of up to $3.4 trillion and 1.2 billion people. However, as the agreement moves forward, questions remain about its implementation and the legal and regulatory hurdles that businesses may face. Cuadro Sakodi, a partner at Mayer Brown International Legal Practitioners, highlighted some of these challenges in a recent interview on CNBC Africa. One of the primary concerns raised by Sakodi is the need for individual countries to take concrete steps to liberalize and reduce trade barriers, both tariff and non-tariff, in order to fully realize the benefits of the agreement. While progress has been made with several countries ratifying the agreement, there is still much work to be done to ensure its successful implementation. Sakodi also emphasized the importance of dispute resolution mechanisms under the AfCFTA. Unlike some regional economic communities that allow for direct rights for businesses or investors in case of disputes, the AfCFTA primarily addresses disputes at a state-to-state level. This has raised concerns among businesses about the effectiveness of the dispute settlement protocol and the protection of investments. Despite the potential benefits of the AfCFTA, businesses are advised not to overlook traditional forms of dispute resolution and investment protection, such as international arbitration and bilateral investment treaties. These mechanisms remain crucial for safeguarding investments and resolving disputes effectively. Looking ahead, the success of the AfCFTA will depend on how well these legal and regulatory challenges are addressed. With the rise of nationalism and protectionist policies in other parts of the world, including Brexit and the 'America First' agenda, African countries must work together to maximize the benefits of regional integration and free trade. By putting Africa first and coordinating their efforts, African economies can strengthen their position in the global marketplace and navigate the complexities of international trade effectively. As businesses navigate the legal and regulatory hurdles under the AfCFTA, staying informed about the agreement's provisions and seeking legal counsel will be essential in ensuring compliance and maximizing the opportunities it presents. The road ahead may be challenging, but with strategic planning and a collaborative approach, businesses can adapt to the new trade landscape and thrive in the era of the AfCFTA.