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Featured - News - January 1, 2021

Historic! Trading under the AfCFTA launched 

The secretariat of the African Continental Free Trade Area (AfCFTA) in collaboration with the African Union Commission Friday, virtually launched the Start of Trading under the much-awaited Free Trade Area (FTA), the world’s largest free trade zone since the formation of the World Trade Organisation (WTO) in 1994.

 

 

Trading under the FTA, which was earlier billed to commence July 1 2020 but had to be postponed to January 1, 2021 due to the advent of the Covid-19 pandemic, epitomizes the manifestation of Africa’s long-held dream of continental economic integration ever since the formation of the Organisation for African Unity (OAU) in 1963. Thus, the FTA creates out of Africa’s current 55 balkanized economies, a single continental market of 1.3 billion people with a combined Gross Domestic Product (GDP) valued at US$3.4 trillion.

It would be recalled the Agreement establishing the AfCFTA was signed at the 10th Extraordinary Summit of the AU Assembly on the 21st of March 2018 in Kigali, Rwanda, and entered into force on the 30th of May 2019. The Agreement creates a single continental market for goods and services which allows for free movement of business persons and investments and will consequently expand intra-Africa trade across Africa’s Regional Economic Communities (RECs) as well as enhancing competitiveness and supporting economic transformation.

In his keynote address at the virtual launch, President Cyril Ramaphosa of the Republic of South Africa cum current chairperson of the African Union, said the fact that 54 out of 55 AU countries had signed the AfCFTA Agreement, about 33 countries had ratified it while over 40 countries had submitted their tariff offers, was a strong signal as to Africa’s readiness to start trading on the basis of the new rules and preferences that would guarantee the cherished vision of One African Market. He thus urged member states that were yet to ratify the Agreement to fast-track the FTA process so as to ensure no one was left behind.

The AU chairperson also emphasized the need for recommitment of efforts towards the AU’s overarching goal of Silencing the Guns in Africa – as effective and successful intra-Africa trading would solely depend on peace, security and co-existence between African communities. “As we look forward to ushering the AfCFTA trading, we shouldn’t forget our common commitment, ‘the silencing the guns campaign’, as we can’t have a successful trading without peace. We need to fast track all pending matters and make the Agenda 2063 a priority,” Ramaphosa urged.

In his opening remarks, Secretary General of the AfCFTA Wamkele Mene, underlined that the AfCFTA would not be just another trade agreement; instead, it would be a mechanism for Africa’s development by closing the gender pay gap, and creating the opportunity for African SMEs to access new markets. “We are working very closely with our technical partners to develop digital technology platforms that will enable connectivity of Small to Medium Enterprises, and enable connectivity of young Africans in trade. This Agreement does not benefit only the big corporations on the African continent, but it should always be inclusive of young Africans, women and African SMEs,” he said.

The AfCFTA principal said he was now convinced Africa had taken active steps to dismantle the colonial economic model it had inherited and sustained over a period of 60 years. He therefore restated the need for the continent to stop being exporter of primary products to countries of the global north and instead create jobs on the African continent, by developing its regional value chain and becoming self-sufficient through its own continental production.

“In 2020, Covid-19 has demonstrated, that Africa is overly reliant on import of primary goods, overly reliant on global supply chains, and when these global chains are disrupted, Africa suffers. When these global chains are subdued, we know that Africa suffers. So we have to take active steps to make sure this industrial development is accelerated and this African Continental Free Trade Area and the Launch of Trading today are the first steps we take into that direction,” Mene stressed.

In his address, Mr Moussa Faki Mahamat, the chairperson of the AU Commission, identified the AfCFTA as undoubtedly an opportunity to spur African industries to upscale and create new value and supply chains to increase industry efficacy on the continent, adding that the FTA would generate more employment opportunities for Africa’s burgeoning youth population.

Faki further said in order to guarantee ceaseless supply of needed commodities for the over 1 billion population of the continent, there was need to upscale the SMEs by providing conducive business environment for them to thrive, noting that the AfCFTA had provided such a conducive environment through drastic reduction of tariffs on various commodities, thereby allowing the SMEs the opportunity to access a much bigger market than they used to before.

The AU Commission chief called on African entrepreneurs, pension funds and other stakeholders to invest in the One African Market so as to spur rapid growth of the continent’s economy and its competitiveness in the global value chain. “The African Continental Free Trade Area will fundamentally change the economic fortunes of our continent. I call on the entrepreneurs of our nation to seize the abundant opportunities that this historic development will present to explore new markets and build new partnerships.”

According to the African Union, Friday’s virtual Launch of Trading under the AfCFTA, held in partnership with the UN Economic Commission for Africa (UNECA), Africa Export-Import Bank (Afreximbank), and AfroChampions Initiative, was the first of a series of events that would take place virtually and physically over the coming weeks, in commemoration of this important occasion in fulfilment of the OAU founding fathers’ dream of a truly united and integrated continent.

 

 

 

 

 

 

 

 

 

 

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