African Continental Free Trade Agreement

The African Continental Free Trade Agreement led to what we refer today as the African Continental Free Trade Area (ACFTA). In other words, ACFTA is a free trade area which is outlined in the African Continental Free Trade Agreement which was signed among 54 of 55 African Union Nations. This free trade area which we are talking about turns out to be the largest in the world in terms of actively participating countries since the creation of the World Trade Organization. It was on March 21, 2018 that the agreements was sealed by the African Union (AU). This agreement was signed by 44 of its 55 member states in Kigali, Rwanda. The agreement initially requires all its actively participating members to cutoff tariffs from 90% of goods as well as allowing free access to services, commodities, and goods across the African continent.

Through research, the United Nations Economic Commission for African estimates that the African Continental Free Trade Agreement will boost intra-African trade by 52% by the year 2022. This agreement was fixed to come into force 30 days after ratification by 22 of the signatory African states. Gambia became the 22nd state to ratify the agreement on April 2, 2019. On April 29, the Saharawi Republic made the 22nd deposit of instruments of ratification. However, it was not until May 30 that the agreement went into force. It later went into its operational phase following a summit on July 7, 2019.

African Continental Free Trade Agreement

The Egyptian President together with the African Union Chairman, Abdel Fattah al-Sisi pointed out that the eyes of the world are turned towards Africa. They further pointed out to the fact that the success of the AFCTA will be the real test to achieve the economic growth that will turn the dreams of welfare and quality in the minds of Africans into a reality.

ALSO READ How to enhance relationship with business partners

ACFTA Objectives

It is without doubt that the ACFTA initiative came into existence with aims of ameliorating living standards in African countries while boosting its economy. Below are some of the main reasons why the initiative saw the light of the day:

Establish a single continental market for goods and services, with free movement of business men and women as well as investments thereby accelerating the establishment of the African custom union and the Continental custom union.
Improve on the competitiveness at the industrial level through the exploitation of opportunities for scale production, reallocation of resources, and continental market access.
Boost the growth and efficiency of intra-African trade through better coordination and harmonization of trade liberalization as well as instruments across RECs and the facilitation regimes in Africa as a whole.
Resolving the challenges that revolve around multiple and overlapping memberships as well as expedite the regional and continental integration processes.

Africa in the midst of other continents

It is without doubt that Africa has a long way to go in order to meet up with other continents when it comes to intra-regional trading. In 2017, it was noted that Africa accounts just for 17% of exports when dealing with intra-regional trading whereas Asia accounts for 59% and Europe accounts for 69%. Analyzing the situation at hand, Economist attribute this lag to major challenges as poor road and rail-links, excessive boarder bureaucracy, and excessive corruption.

However, African countries have embarked on the journey of ameliorating their intra-regional trading relationships and we can expect better results in times to come.