Designing an AfCFTA-Driven Continent-Wide Competition Policy Around the Regional Economic Communities

• Author: Leo Kemboi,Darmi Jattani,Emmanuel Wa-Kyendo,Fiona Okadia,Melody Njeru
• Date: 01 December 2021
• DOI: 10.1177/0003603X211045749
• Published date: 01 December 2021

Symposium: Competition Policy and Law within the Context of the Continental Integration:

What Are the Sticking Issues for African Countries?

Designing an AfCFTA-Driven

Continent-Wide Competition

Policy Around the Regional

Economic Communities

Fiona Okadia

*

, Emmanuel Wa-Kyendo

*

, Melody Njeru

*

,

Darmi Jattani

*

, and Leo Kemboi

*

Abstract

Implementation of the African Continental Free Trade Area (AfCFTA) Agreement will lead to liber-

alization of trade in Africa, thus expanding the market for African products and services. Expansion of

markets necessitates development of a regulatory framework that will promote healthy competition

among businesses and protect consumers’ welfare. The Agreement recognizes this fact and has set out

the Competition Protocol among the key enablers of its success. Since the regional economic com-

munities (RECs) are the building blocks of the continental wide free trade area, the analysis of their

regional competition regime is paramount for providing insight that will guide the development of the

Competition Protocol. This article responds to this need by analyzing Africa’s four largest RECs and

providing policy proposals on how the continental competition policy should be fashioned. Specifically,

this article looks at the RECs’ institutional structure, principles, and carries out a legal, economic, and

political analysis on the same. It examines how these laws relate to the three elements (abuse of

dominance, anticompetitive mergers, and acquisitions) of competition policy and the challenges that

they pose in achieving AfCFTA’s goal. It also looks into the challenges that affect trade and fair

competition in the region. Finally, it offers proposals on the competition framework that bridge the gap

between the AfCFTA Agreement objectives and the African economic, political, and legal realities.

Keywords

competition policy, African Continental Free Trade Area, competition law, competition authorities,

regional economic communities

*

Institute of Economic Affairs, Nairobi, Kenya

Corresponding Author:

Fiona Okadia, Institute of Economic Affairs, Nairobi, Kenya.

Email: okadiaf@ieakenya.or.ke

The Antitrust Bulletin

2021, Vol. 66(4) 556–575

ªThe Author(s) 2021

Article reuse guidelines:

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DOI: 10.1177/0003603X211045749

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I. Introduction

A. Background

The African Continental Free Trade Area (AfCFTA) Agreement came into force on May 30, 2019,

after twenty-four African countries successfully deposited their ratification instruments with the

African Union (AU) Commission Chairperson. By May 2021, thirty-six countries had deposited their

instruments of ratification, and thirty-eight had met the domestic requirements for the AfCFTA

agreement. Currently, all AU members states have signed the treaty apart fro m Eritrea. The AU

Assembly approved January 1, 2021, as the date for the official start of trading under the AfCFTA

agreement. It is expected that upon implementation of the Agreement, Africa’s income would increase

by 450 billion dollars by 2035 and 30 million Africans would be lifted out of extreme poverty.

1

The overarching objective of the Agreement is to have a continent-wide single market for goods and

services while allowing the free movement of both capital and persons. It is expected that liberalizing

the African market by eliminating or reducing tariffs and nontariff barriers among State Parties will

deepen economic integration and increase the socioeconomic welfare of African citizens. Other

objectives of the AfCFTA agreement that have a significant impact on the competition policy include

laying the foundation for the establishment of a Continental Customs Union, enhance the competi-

tiveness of the economies of State Parties within the continent and the global market, and promotion of

industrial development through diversification and regional value chain development, agricultural

development, and food security.

1. The AfCFTA Principles. The AfCFTA is g overned by twelve principles that s et out the terms of

implementation of the agreement. The effect of these principles on competition reforms and realization

of an African Competition Policy differs among each other. Implementation of the AfCFTA agreement

in this governing framework will either hasten or slow down the pace of continental integration and

subsequent adoption of a continental competition policy. The outline below gives the principles and

their potential effect on the implementation of competition reforms:

a) Driven by the Member States—The member states that constitute the assembly of the AU

are the highest decision-making organ of the AfCFTA agreement. They provide oversight

and strategic guidance on the agreement. Decisions adopted at this level are binding to the

State Parties. This includes negotiations and agreements on Competition Policy Protocol.

The pace of competition reforms will be dependent on the individual member state’s speed

of ratifying, ascending, and implementing agreements. Since the commitment to integration

varies across the State Parties, this will generally slow down the process of realization of

competition reforms.

b) Regional Economic Community’s (REC) Free Trade Areas (FTAs) as building blocks of

AFCFTA—The RECs are at different levels of implementing competition policies, laws,

and establishing competition authorities. In some instances, there are RECs that have not

formed FTAs yet which is required for trade liberalization and subsequently kickstart

competition reforms processes. Moreover, there is no specific plan that addresses the dis-

parities between the RECs meaning that successive rounds of negotiations will have to be

deliberately carried out which may take a lot of time. Relatedly, multiple and overlapping

memberships in RECs have also led to complexity, lax enforcement, and uncertainty.

2

In

1. WORLD BANK,THE AFRICAN CONTINENTAL FREE TRADE AREA:ECONOMIC AND DISTRIBUTIONAL EFFECTS (2020).

2. L. Abrego et al, The African Continental Free Trade Area: Potential Economic Impact and Challenges, s.l.: IMF (2020),

https://www.imf.org/en/Publications/Staff-Discussion-Notes/I ssues/2020/05/13/The-African-Continental-Free-Trade-Area-

Potential-Economic-Impact-and-Challenges-46235.

Okadia et al. 557