The African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA) is a major trade agreement between the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs). It aims to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately $3.4 trillion. The AfCFTA is one of the flagship projects of Agenda 2063: The Africa We Want, the African Union’s long-term development strategy for transforming the continent into a global powerhouse.
Eliminating Trade Barriers
- The overall mandate of the AfCFTA is to eliminate trade barriers and boost intra-Africa trade. The agreement aims to advance trade in value-added production across all service sectors of the African Economy.
- The AfCFTA will contribute to establishing regional value chains in Africa, enabling investment and job creation. The practical implementation of the AfCFTA has the potential to foster industrialization, job creation, and investment, thus enhancing the competitiveness of Africa in the medium to long term.
- The AfCFTA entered into force on May 30, 2019, after 24 Member States deposited their Instruments of Ratification following a series of continuous continental engagements spanning since 2012.
- It was launched at the 12th Extraordinary Session of the AU Assembly of Heads of State and Government in Niamey – Niger, in July 2019. The commencement of trading under the AfCFTA was in January 1, 2021. The AfCFTA Secretariat is hosted in Accra, Ghana. His Excellency Wamkele Mene is the first elected Secretary-General coordinating the implementation of the Agreement.
High Ambition Trade Agreement
- The AfCFTA is a high ambition trade agreement, with a comprehensive scope that includes critical areas of Africa’s economy, such as digital trade and investment protection, amongst other areas.
- By eliminating barriers to trade in Africa, the objective of the AfCFTA is to significantly boost intra-Africa trade, particularly trade in value-added production and trade across all sectors of Africa’s economy.
- The AfCFTA is one of the flagship projects of Agenda 2063: The Africa We Want. This long-term development strategy for transforming the continent into a global powerhouse, aims to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately $3.4 trillion. The AfCFTA is a key step towards achieving this goal.
Benefits of AfCFTA
- The AfCFTA has the potential to bring multiple benefits to the African continent. Firstly, it is expected to boost intra-Africa trade by eliminating trade barriers and tariffs on goods and services. This will lead to a more efficient allocation of resources, as well as increased competition and innovation.
- Secondly, the AfCFTA will help to establish regional value chains in Africa, which will in turn boost industrialization and job creation. Thirdly, the AfCFTA will help to attract more foreign investment to Africa, as investors will now have access to a larger market. Additionally, the AfCFTA will also help to promote digital trade and investment protection in Africa.
- However, the implementation of the AfCFTA is not without its challenges. One major challenge is the lack of infrastructure and logistics to facilitate trade between African countries.
- Many African countries also lack the necessary infrastructure to participate in digital trade. Additionally, there are also concerns about the ability of some African countries to compete with each other in the new single market.
- Another challenge is the lack of harmonized regulations and standards across the continent. Many African countries have different regulations and standards for goods and services, which can make it difficult for businesses to operate across borders.
The AfCFTA is a major step towards achieving the African Union’s goal of creating a single continental market with a population of about 1.3 billion people and a combined GDP of approximately $3.4 trillion. The AfCFTA has the potential to bring multiple benefits to the African continent, including increased intra-Africa trade, industrialization, job creation and foreign investment. However, the implementation of the AfCFTA is not without its challenges, and it will require the cooperation and commitment of all African countries to overcome these challenges and fully realize the potential benefits of the AfCFTA.
No comments yet.