This article is extracted from Trade Unions and Trade: A Guide to the AfCFTA Protocol on Trade in Services. This guide highlights key concerns, opportunities and actions for trade unions. 

The African Continental Free Trade Area (AfCFTA) aims to establish a single market for goods and services, enhance investment, and lay the groundwork for a Continental Customs Union. However, while the Agreement promises economic transformation, inclusive growth is not guaranteed. Crucially, the Agreement lacks explicit labour provisions, which makes trade union advocacy essential.

The AfCFTA is given effect through nine protocols, which set out the rules, terms, and procedures for the Agreement. The first Protocol on Trade in Goods addressed the liberalisation of trade in commodities and manufactured products, while the second Protocol on Trade in Services provides a framework for the removal of trade barriers through reciprocal negotiations between member states. Unlike goods trade, services trade faces challenges mainly due to Non-Tariff Barriers (NTBs). NTBs include industry regulations, restrictions on skilled labour mobility, unrecognition of foreign qualifications and constraints on business structure and ownership. The Protocol on Trade in Services seeks to remove or streamline these NTBs to create a more unified and competitive services market across Africa.

Services trade in Africa

The services sector accounts for approximately 54% of Africa’s GDP and attracts 75% of foreign direct investment. It also plays a crucial role in supporting agriculture and manufacturing while being a significant employment source, particularly for women and youth. However, Africa’s trade in services remains underdeveloped, contributing only 22% to intra-African trade and a mere 2% to global service exports.

Source: A guide to the AfCFTA Protocol on Trade in Services

Trade in services primarily revolves around lower-skilled sectors such as transport and tourism, with limited high-value business services exports. Recognising this, the AfCFTA seeks to facilitate the movement of services across borders, structured around the four World Trade Organisation (WTO) modes of services trade:

1. Cross-border supply – Services flow from one African country to another, but both the consumer and supplier remain in their respective countries.
2. Consumption abroad – A person from one country, consumes services in another.
3. Commercial presence – A commercial services supplier establishes a presence in another country, to deliver services to that market.
4. Movement of natural persons – Individuals from one African country, temporary relocate to another to deliver services.

Source: A guide to the AfCFTA Protocol on Trade in Services

Regulation of services trade

Before the AfCFTA, services trade was governed by Africa’s eight Regional Economic Communities (RECs). However, these agreements had minimal success in liberalising trade due to inefficient design, weak enforcement, and overlapping memberships. The AfCFTA builds upon REC frameworks but does not replace them. It seeks to create a more cohesive regulatory landscape by ensuring member states commit to the least restrictive trade rules between existing REC agreements and the AfCFTA.

The AfCFTA trade in services protocol sets out to:

• Progressively liberalise trade in services.
• Accelerate industrial development and strengthen regional value chains.
• Enhance competitiveness by reducing business costs and improving market access.

Although it largely mirrors the WTO’s General Agreement on Trade in Services (GATS), the Protocol incorporates adaptations suited to Africa’s economic realities. Notably, it excludes measures related to air traffic rights, preserving national control over airspace.

Special treatment for Least Developed Countries

Nigeria, Egypt, and South Africa alone account for nearly half of Africa’s GDP. The trade in services protocol acknowledges the economic disparities between member states. Article 7 of the Protocol provides for “Special and Differential Treatment” for Least Developed Countries. The implementation of these provisions is unclear: 

• Gradual liberalisation of service sectors critical to growth.
• Transitional periods to adjust to regulatory changes.
• Targeted technical assistance and capacity-building initiatives.

The Protocol enforces:

1. Most-Favoured-Nation (MFN) Treatment: All member states must grant the same trade benefits to each other.
2. Special and Differential Treatment (SDT): Allows exemptions for LDCs to facilitate their integration.
3. Transparency: Requires full disclosure of measures affecting services trade.
4. Rules that enable progressive liberalisation

Liberalisation will occur through successive negotiation rounds. However, progress has been slow, with many countries yet to finalise sector-specific commitments.

Source: A guide to the AfCFTA Protocol on Trade in Services

Red tape in services trade

Regulations restricting services trade often serve legitimate public policy objectives, such as consumer protection and national security. However, they also create obstacles for market access. The World Bank, WTO, and AfCFTA Secretariat have developed the Services Trade Restrictiveness Index (STRI) to categorise and address these barriers.  

• Restrictions on foreign entry
• Restrictions on the Free Movement of People
• Other discriminatory measures against foreign-owned businesses in the areas of taxes, subsidies and public procurement.

Target services sectors and impact on jobs

Member states have prioritised five service sectors for liberalisation. These sectors are expected to benefit from improved market access: Financial services, business services, communication, transport, and tourism.

The World Bank estimates that full AfCFTA implementation could increase intra-African trade by 81% and lift 40 million people out of poverty by 2035. Much of this growth will stem from trade in goods, with services trade expected to rise by only 4% overall and 13% within Africa. Key concerns for workers include:

Job displacement: Outsourcing and competition from foreign service providers may lead to job losses.

Human capital flight: Skilled professionals may migrate, exacerbating talent shortages in certain countries.

Labour rights erosion: Firms may relocate to countries with weaker labour laws.

Source: A guide to the AfCFTA Protocol on Trade in Services

How can trade unions respond to the Protocol on Trade in Services?

Trade unions can consider the following recommendations about how best to respond to the Protocol:

1. Advocate for a decent work agenda.
2. Be active observers in the negotiations.
3. Build local and regional alliances.
4. Raise awareness among workers in key service sectors.
5. Develop the capacity to assess the impacts of the Protocol on economic growth and employment.

View the detailed recommendations in A Guide to the AfCFTA Protocol on Trade in Services.

RELATED RESOURCES

• A guide to the AfCFTA Protocol on Trade in Goods
• A Trade Union guide to the AfCFTA Agreement