Why African nations are signing up in droves
By Tasie Theodore
There are some things you may not have known about the landmark African Continental Free Trade Agreement, AfCFTA. This is what this piece is about, so let’s go!
Clearly a very popular initiative in the continent, 51 of Africa’s 55 states have presently signed the Agreement. The main stand-out now is Nigeria and she says she is still studying it.
The full implementation of the African Continental Free Trade Area Agreement (AfCFTA) will inaugurate a market of 1.2 billion people with an estimated Gross Domestic Product (GDP) of about $3.5 trillion based on the framework of a single continental market for goods and services, with complementing free movement of business persons and investments.
It will provoke participating countries to undertake internal economic reform and to shift their focus from exporting essentially raw and primary state products, goods and services to value added products and related offerings. Improved and finished goods will be the new focus and revenues could rise six-fold in many cases.
The trade deal will almost inevitably also trigger a continuing spiral of more intra-African trade and structural transformation of African economies.
It will drive the transition from low productivity and labour-intensive activities to higher productivity and skills-intensive industrial and service activities that will then translate to better paid jobs and poverty eradication.
AfCFTA will also encourage the institution of more effective financial and legal institutions to underpin the new and expanding consensus for free flow of goods and services, continent-wide.
It will lead to more open borders and more improved cross-border security cooperation within the continent. Reforms in education and a renascent drive for new skills acquisition to deal with the shifting dynamics being unleashed by AfCFTA would also come into play.
More Africans are also likely to become more bilingual and educational systems will also need to be adjusted accordingly. Countries like Rwanda that successfully reconfigured their educational systems recently have a head-start in this regard.
Financial and economic literacy will get a boost and people will be compelled to scale up in these respects. Also, aviation, travel, tourism and related service offerings will be boosted. Cross-border infrastructural development would also receive a boost.
It will eventually translate into improved pan-African political cooperation within the continent and greater interest in the continental homeland from the pan-African diaspora.
The free-trade area will be the largest in the world in the sheer number of participating countries since the formation of the World Trade Organisation.
The scheme is also projected to practically boost intra-African trade by 52.3 percent through the elimination of import duties, and 100 percent through the elimination of non-tariff barriers.
The landmark process began in Kigali, Rwanda, on March 21, 2018.
The agreement would initially require member states to remove tariffs from 90 per cent of goods, allowing free access to commodities, goods, and services continent-wide.