The Africa Continental Free Trade Agreement: What You Need to Know
The Africa Continental Free Trade Agreement (AfCFTA) is a historic agreement aimed at boosting intra-African trade by creating the world`s largest free trade area with a potential market of 1.2 billion people and a combined GDP of around $2.5 trillion.
The agreement was signed on March 21, 2018, in Kigali, Rwanda, by 44 African countries and came into effect on January 1, 2021. Currently, 54 out of the 55 African Union member countries have signed the agreement, with only Eritrea yet to join.
What is the AfCFTA?
The AfCFTA is a trade agreement that aims to create a single market for goods and services, free movement of business people and investments, and a customs union to facilitate trade on the continent.
It is the largest free trade agreement in terms of the number of participating countries since the creation of the World Trade Organization in 1995. The AfCFTA is expected to increase intra-African trade from the current 15% to 52% by 2022, according to the United Nations Economic Commission for Africa.
Benefits of the AfCFTA
The AfCFTA is expected to bring significant benefits to Africa, including:
1. Increased trade: The agreement will reduce trade barriers, eliminate tariffs, and create new trade opportunities, leading to increased trade among African countries.
2. Jobs and economic growth: Increased trade will boost economic growth, create jobs, and raise the standard of living for Africans.
3. Regional integration: The agreement will foster deeper regional integration and cooperation, leading to greater political stability, security, and social cohesion.
4. Foreign investment: The AfCFTA will create a more attractive and predictable investment climate for foreign investors, leading to increased foreign investment in Africa.
Implementing the AfCFTA will not be without challenges, including:
1. Infrastructure: Inadequate infrastructure, including roads, ports, and power supply, is a significant challenge that needs to be addressed to facilitate trade on the continent.
2. Regulatory frameworks: Harmonizing regulatory frameworks across countries is crucial to ensure that products and services can move freely in the region.
3. Customs procedures: Streamlining customs procedures and reducing bureaucracy is essential to facilitate trade and reduce costs for businesses.
4. Political will: The success of the agreement will depend on strong political will and commitment from participating countries to implement it effectively.
The Africa Continental Free Trade Agreement is a bold and ambitious initiative that has the potential to transform the African continent. It is expected to boost intra-African trade, create jobs, promote economic growth, and foster regional integration and cooperation. While challenges remain, the benefits of the AfCFTA far outweigh the challenges, and it is an essential step towards realizing the African Union`s vision of an integrated and prosperous Africa.