Afcfta’s “impossible trinity”.

2026-01-21 19:16:21   |   Ms Yedidia Kamanzi

Today, the African Continental Free Trade Area (AfCFTA) is at the centre of interest among politicians, economists, lawyers, etc., who discuss its plausible outcomes. A successful AfCFTA will greatly change the overall socio-economic situation in Africa through the liberalisation of internal trade. Be that as it may, the AfCFTA can also be viewed from other angles, such as its potential impact on harmful tax competition in Africa. Unlike the European Union, whose success in the single market is due to several factors, including effective regulation of harmful tax competition, this area is still uncharted territory for Africa. There is, therefore, a high risk that a successful AfCFTA will encourage companies to locate in countries with favourable taxation, as businesses will be able to trade across the African continent. As a result, a successful AfCFTA in terms of trade liberalisation risks, on the other hand, to exacerbate harmful tax practices that erode the sovereigns’ tax bases. In the book “Law and Policy of the African Continental Free Trade Area: Prospects and Challenges for Trade and Investment in Africa” published by Springer - European Yearbook of International Economic Law (2025), in a chapter titled “Can AfCFTA Balance and Reconcile the Impossible Trinity: Promoting Trade Liberalisation, Avoiding Tax Base Erosion and Curtailing Harmful Tax Practices in Africa?” Dr. Pie Habimana shows that a successful AfCFTA carries the risk that multinational companies will shift their profits and relocate in order to minimise the tax payable. To prevent this, he proposes the adoption of an Additional Protocol based on Article 8(3) of the AfCFTA Agreement.

https://link.springer.com/chapter/10.1007/978-3-032-01122-0_5