Africa: the largest free trade area in the world
African countries began officially trading under a new continent-wide free trade area on 1st January, after months of delays caused by the global coronavirus pandemic. (agreement’s full text)
The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. (worldbank.org)
The project aims to create a single continental market for goods and services through a comprehensive agreement by member countries that will see more African resources traded within the continent.
The agreement will work towards a continental customs union; eliminate tariffs on 90% of intra-Africa goods; aid in the movement of capital and people between countries; facilitate external investment; and reduce non-tariff barriers, like the time it takes goods to pass through customs (Quarz)
The African Continental Free Trade Area (AfCFTA) represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion, a new World Bank report has found. If implemented fully, the trade pact could boost regional income by 7% or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035. (worldbank.org)
Many challenges will have to be overcome in order for AfCFTA to be able to bring inclusive and sustainable growth. The African Development Bank has calculated that an increase in infrastructural investments of 40 billion dollars a year will be necessary for economic, demographic and productive growth to be channeled efficiently and for goods to be allocated without excessive waste and losses. National institutions will also have to be reinforced, boosting the economies of the countries and fostering the gradual passage from an informal economy to a formal and laid out economy. (focusonafrica.info)
“Economic integration is not an event. It’s a process, ”said Silver Ojakol, chief of staff at the AfCFTA Secretariat. “We have to start somewhere”.
This time for Africa.
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