A common African market for a shared African future: The African Continental Free Trade Agreement has the potential to revolutionize businesses, create economies of scale.

Author:'Utokamanu, Fehtamoeloa
 
FREE EXCERPT

Four years ago, negotiations were initiated for an African Continental Free Trade Agreement (AfCFTA), which entered its operational phase in July 2019. This represented a major development as the agreement not only set up the world's largest free trade zone but also created a common African market for a shared African future.

The agreement is ambitious, transformative and game-changing. It recognizes the enormous potential for African countries to boost trade with one another and expand their share of world trade.

By eliminating 90% of tariffs on goods and significandyreducingnon-tariff measures (NTMs) on merchandise and services, the AfCFTA represented an unprecedented effort to integrate the continent into a unified market. It includes a combined gross domestic product (GDP) of $2.5 trillion and a population of more than 1 billion people, with 60% of them below age 25.

Africa is the continent containing the highest number of countries. Of course there are considerable variations in size both physically and economically. They encompass 32 least developed countries (LDCs), 16 landlocked developing countries (LLDCs) and six small island developing States (SIDS).

A majority of these countries face considerable supply constraints compounded by geographic and structural features. Ensuring that the rollout and benefits of the AfCFTA reach out to all across a highly diverse group of economies will be critical.

We must ensure that the implementation of global frameworks, such as the programmes of action for LDCs, LLDCs and SIDS, and that of AfCFTA are mutually reinforcing. It is the synergies capable of delivering the full benefits of free trade to all countries across the continent.

All such endeavours focus on the urgent action to improve infrastructure; expand access to sustainable energy; promote skills development and entrepreneurship; and expand access to development finance. These preconditions must be met to enable countries to produce efficiently and to compete both regionally and globally.

Let us consider, for example, high transport costs as an impeder of trade in African LDCs, LLDCs and SIDS. Export and import expenses for some African LLDCs are more than twice that of neighbouring transit countries. These costs have increased over time, undermining the competitiveness of goods and services produced by such countries.

It is thus an imperative to improve physical transport systems with a view on building integrated, sustainable and...

To continue reading

REQUEST YOUR TRIAL