Create One African Market
The African Continental Free Trade Area
Accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.
Create One African Market
Accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.
The African Continental Free Trade Area (AfCFTA) aims to integrate, diversify and industrialize African economies of about 1.3 billion people, with a combined gross domestic product (GDP) of 3.4 trillion dollars. All countries in Africa but Eritrea signed the agreement for the free trade area in March 2018, although 23 countries have deposited the agreement with their respective legislative bodies, for ratification.
AfCFTA became effective on May 30, 2019, as stipulated in the agreement establishing the continent's free trade area. It has two phases.
The first has seen outstanding issues such as schedules of tariff concession and rules of origin (RoO) yet to be addressed. They require negotiations for trade under the CFTA to begin. During the second phase, talks on protocols on competition policy, investment, and intellectual properties are undergoing.
An important landmark was January 1, 2021; the world’s largest economic bloc opens up for business among the African Union members (AU), which championed the free trade area in the continent. In a decade, countries in the continent have agreed to phase out 97pc of their tariff on imported goods with each other. It is, however, estimated that African countries might have a fiscal loss of over 4.1 billion dollars from the removal of tariffs due to the implementation of AfCFTA. However, African countries stand to gain more as it is highlighted here in the Digest section.
Africa also suffers from an annual gap in trade finance the International Chamber of Commerce estimates to have reached between 110 billion dollars and 120 billion dollars.
Only two countries in Africa that signed up for the African Continental Free Trade Area (AfCFTA) – Egypt and South Africa – have advanced in establishing trade remedy authorities. All signatories to AfCFTA are required to set up such national rules to prevent dumping. Nigeria is hoped to follow suit soon.
Public health measures countries made to combat the spread of COVID-19 could not have come at the wrong time for Africa, a continent that has just launched its free trade area agreement in January 2021. Border closure and travel bans have hampered Inter-Africa trade, and uncertainties in tariffs and exchange rate, notes PricewaterhouseCoopers, a consulting firm that released a Report recently.
The African Export & Import Bank (Afreximbank, one of the financial institutions active in Africa, has reported itself investing over 1.7 billion dollars in supporting the development of value chains to accelerate the process of industrialization and lift constraints in the supply side. It is a crucial investment to promote the growth of trade within Africa, which is otherwise dependent on non-African sources.
Lowering tariffs may not be the magic wand for promoting businesses and helping economies grow. But what lies in the value proposition of AfCFTA is its offer for incremental and long-term benefit in creating new markets for goods and services.
The Brookings Institution has this forecast for Africa through 2021, where it dedicated Chapter Five to address economic integration. The COVID-19 may have dealt the speedy implementation of the African Continent Free Trade Area (AfCFTA) a blow. But Brookings insists that leaders in Africa “must move forward with the ambitious project.”
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The six benefits of a free trade regime worth pursuing between African countries, which may help the continent change the game in its favour.
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Businesses basedin Africa or those from the outside but working with the continent can learn the nitty-gritty of the AfCFTA treaty.
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On 1 January 2021, at the launch of the start of trading on the basis of the AfCFTA, the Pan-African Private Sector,
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A new trade intelligence tool that enables firms to easily explore and compare trade opportunities across Africa has been released ahead of the start of trading under the new African Continental Free Trade Area.
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African Union Heads of State and Government have underscored the urgent need for member states to kick-start trading activities, under the African Continental Free Trade Area (AfCFTA).
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Trade Africa: Making Sense