As it is set to be launched, this weekend, the African Continental Free Trade Area, the largest free-trade area in the world – in terms of number of countries – could prove to be the long-awaited powerful catalyst for the continent’s sustainable economic growth and development
Thanks to its vast array of largely untapped natural resources, Africa is (potentially) one of the richest continents of the world. A mesh of 55 different countries, the continent boasts a staggering population of over 1 billion people with a combined Gross Domestic Product (GDP) of about $2.5 trillion. On March 21, 2019, 52 out of the 55 African Union member states signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda. The free-trade agreement established the African continent as the largest free-trade area in the world, since the creation of the World Trade Organization in 1995.
AfCFTA seeks to create a single, liberalized continental market for goods and services; allow the free movement of business persons; and could ultimately lead to the establishment of Pan-African institutions such as a continental customs union. CFTA aims to ensure the removal of tariffs on 90% of goods produced by AU member states; this will help expand and enhance trade between African countries and consequently transform the continent`s economy and improve the livelihood of its people.
Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) Mukhisa Kituyi had described AfCFTA as a landmark achievement in the continent`s journey towards regional integration, adding that it would generate significant economic gains for Africa. UNCTAD’s newly-released: “Economic Development in Africa Report 2019,” placed trade between African countries at 15% -compared to 47% in America; 61% in Asia; and 67% in Europe.
If successfully implemented by AU member states, the CFTA will radically change that as well as lead to significant reduction in poverty levels across the continent. AfCFTA is projected to boost the GDP of AU member states by between 1% to 3% and intra-African trade by 33%, thanks to the removal of tariffs. Consequently, doing so will lead to increased investments as well as create market opportunities for African businesses in Africa. It is also projected to lead to a combined consumer and business spending of more than US$6.7 trillion by 2030, while business-to-business spending will increase to about US$ 4.2 trillion, with agribusiness carting away the lion share of about US$1 trillion.
Africa is hugely endowed with not only abundant natural resources but also a staggering population of about 1.2 billion people – 60% of which is made up of youths between the age of 18 and 24. However, this humungous youth population is also largely unemployed and underemployed. Therefore, African governments must, as a matter of priority, come up with initiatives that will make it easier for Africa’s youths – and also very importantly – women to benefit from the CFTA by coming up with policies that will make it easier for youth-owned and women-owned startup businesses to leverage the immense opportunities provided by the upcoming free trade area.
However, there are many yet to be resolved critically-important aspects of AfCFTA, such as tariff concessions and rules of origin – the criteria for determining the ultimate nationality of a product – which is touted as the major game changer and determinant of the effectiveness or otherwise of the African Continental Free Trade Area, according to UNCTAD. Hence, the rules of origin should be “simple, transparent and business-friendly” in the interest of the effectiveness of the CFTA.
AfCFTA is set to be officially launched at the 12th Extraordinary Summit of Heads of State and Government of the AU on Sunday, July 7, in Niamey, Niger; this epoch-making event in Africa`s history presents unique opportunity to change the face of our continent, forever! However, beyond the launch, all Heads of State and Governments must ensure the full implementation of AfCFTA in their respective countries by providing the enabling environment for their citizens to benefit from the world’s largest free trade area towards the realization of The Africa We Want!
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