The African Continental Free Trade Area (AFCFTA) got into effect on new year’s day paving way for unprecedented free trade across the African continent .
African leaders have over the years pushed to implement the African Continental Free Trade Area- a free trade area founded in 2018, with trade commencing as of 1 January 2021.
THE AFCFTA was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations. The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization which was founded in 19195.
Accra the capital of Ghana will serve as the Secretariat of AFCFTA and was commissioned and handed over to the AU by the President of Ghana His Excellency Nana Addo Dankwa Akuffo Addo on August 17, 2020.
The general objectives of the agreement are to: create a single market, deepening the economic integration of the continent, establish a liberalised market through multiple rounds of negotiations and aid the movement of capital and people across Africa by Africans
The free trade area is also intended to facilitating investment and move towards the establishment of a future continental customs union. The African leaders including President Yoweri Museveni want to achieve sustainable and inclusive socio-economic development, gender equality and structural transformations within member states.
“It will enhance competitiveness of member states within Africa and in the global market and
encourage industrial development through diversification and regional value chain development, agricultural development and food security, “ economic experts have said.
Current statistics prove that African countries do more business with other countries abroad than with countries on the continent. The AU stated that “the percentage of trade that African countries do with each other is a mere 16 – 18%. The bulk of the continent’s trade is with the rest of the world.” It is equally a proven fact that acting in their individual capacities, most of these African countries lack the bargaining power to stand their grounds and negotiate good deals whilst dealing with economic giants.
The AfCFTA will help build such power to strengthen the voice of the continent and its policy space in the global market by way of organizing trade activities, creating a single market for goods and services on the continent, facilitating the movement of goods, services and persons through the removal of existing restrictions, promoting industrial development, value addition and sustainable and inclusive socio-economic growth.
Fortunate enough for the progress of this important initiative, all the 54 member states of the AU have already signed the Agreement establishing the AfCFTA in March 2018, in Kigali Rwanda, with 30 countries depositing their instruments of ratification with His Excellency, Moussa Faki Mahamat, Chairperson of the African Union Commission.
With a united force of all the 54 African States, the African Continental Free Trade Area will cover a market of about 1.2 billion people, with a combined GDP of $3 trillion. This will make the new AFCFT the world’s largest free trade area since the formation of the World Trade Organisation.
According to an earlier report by the World Bank, the AFCFT presents a major opportunity for African countries to bring 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day. The World Bank equally acknowledged the fact that the implementation of AfCFTA would drive $292 billion of the $450 billion in potential income gains.