What is the AfCFTA?
In March 2018, the African Union established the African Continental Free Trade Area Agreement (AfCFTA Agreement) which sought to unify all African countries and allow them to operate as one economic entity, similar to the European Union.
This came into effect on 30 May 2019, with currently 54 out of 55 member states having ratified the agreement. The AfCFTA Agreement has removed trade barriers amongst intra-African trade. This has allowed for Africa to become the largest free trade area with a total population of 1.3 billion people and a total GPD of $3.4 trillion.
Why is Africa an emerging market?
The integrated African market allows for the free movement of goods and services and enables the free movement of persons between regions. It has eliminated 90% of tariffs with a particular focus on creating non-tariff barriers. This is in an effort to streamline trade and customs procedures, as well as promote industrial development and regional integration. Also reducing poverty which in turn will allow Africa to be more competitive in the global economy.
By 2030 this is projected to open investors to a combined consumer and business spending of $6.7 trillion which is estimated to grow to $16.12 trillion by 2050. This transformative change has enabled regional and local value chains to be established.
Why should Australian businesses be interested in the African market?
Understandably many businesses may have a perceived risk in entering a market like Africa as there are infrastructure and regulatory challenges. The AfCFTA Agreement seeks to eliminate these market entry barriers. The AfCFTA Agreement has already removed tariff barriers, implemented a simplified customs document system and created a centralised financial market which ensures a new secure flow of money across borders.
This creates a unique opportunity for international businesses to thrive in a new economy and take advantage of infrastructure and market gaps. It is advised that there are vast opportunities for business in the infrastructure sector specifically, energy, transport, and telecommunications. These endeavours are supported by the African Union as they recognise that IP is a useful mechanism for forging growth in a developing country.
How does the AfCFTA impact IP rights within Africa?
When considering investing time and money into a new market it is essential to understand how your business IP can be protected to establish a competitive advantage and deter competitors.
Phase II of the AfCFTA Agreement has placed specific emphasis on the investment in IP rights. The AfCFTA Agreement states African countries are to establish clear, transparent, predictable, and mutually advantageous rules that will govern competition policies, trade for goods and services, and IP.
In February 2023 the Intellectual Property Rights Protocol (IPR) was established under the AfCFTA Agreement as a legal agreement between Member States to explicitly outline how IP rights should be utilised. This provides a clear framework for protection and enforcement within a more modern system. This also enforces the minimum standards of duration and scope of protection as well as establishes clear conditions for granting and enforcing IP rights.
Understanding the key issues surrounding IP protection in Africa
Notwithstanding the untapped growth within the African market and the benefits that the AfCFTA Agreement brings to breaking down trade barriers, the current issues remain of inconsistent rules between IP offices across regions as well as issues of trade mark squatting and counterfeiters in the first to file jurisdictions.
Understanding inconsistencies between African regions
Currently IP regulation across African countries is inconsistent. Some jurisdictions operate on a first to file system and others first to use. Additionally, a few regions only recognise rights for goods and not services.
Currently two main IP systems exist, Organisation Africaine de la Propriété (OAPI) which governs 17 Member States and African Regional Intellectual Property Organisation (ARIPO) which governs 22 Member States. When registering for rights with these two organisations your IP rights are granted across all the applicable member countries.
However, the remaining 16 members who are not a part of OAPI or ARIPO have their own system of IP rights imbedded within their domestic laws. Within these countries many of them practice outdated IP standards with some countries not having an online filing and records system. This complicates and prolongs the process.
Trade mark squatting and counterfeiting
Another factor to consider when protecting IP within Africa is ‘trade mark squatters’ and counterfeiters. As the OAPI system operates on a first to file basis, legitimate trade mark owners of well-known brands are locked out of the African market due to similar marks already being protected. This requires businesses to have reactive IP protection strategies to ensure they are protected within these jurisdictions.
The practical considerations which should be considered when developing an IP Strategy within African jurisdictions include:
- If the desired region operates under OAPI (first to file) or ARIPO (user rights);
- If the goods and or services are protected within the desired jurisdiction;
- The costs of obtaining a trade mark compared against legal fees if litigation has to be taken to recover a mark;
- The duration of time to file and registration (this can vary from 6 months to two years); and
- Developing a proactive strategy to manage counterfeiting.
In whole, the AfCFTA Agreement provides the groundwork for Australian business to tap into an emerging market. However, to fully leverage these opportunities, businesses must navigate the complexities of IP protection within Africa, understanding the nuances of regional variations and proactively strategising to alleviate risks.
This article was written by Luke Dale, Partner and Carmen Marino, Law Clerk.
