#10Q: What AfCFTA means for African trade
by Louise Burgers. Unpacking the Africa Continental Free Trade Area agreement which began on January 1, 2021.Friday, 22 Jan 2021
by Louise Burgers. The Africa Continental Free Trade Area (AfCFTA) agreement officially began on January 1, 2021, after years of intense negotiations to get the required number of African countries on the continent to buy into the agreement. What this means is that from 1 January, African countries that are signatories to AfCFTA, opened up their markets to the duty-free trading of goods and services across their borders. AfCFTA secretary-general, Wamkele Mene, explains: “This is not just a trade agreement, this is our hope for Africa to be lifted up from poverty.” Following the Covid crisis, it could be Africa’s only hope of not just surviving, but thriving, post-pandemic.
High tariffs, custom delays, a lack of infrastructure, and differing, often restrictive trade barriers in each country or region has throttled trade on the African continent, which ships most of its raw materials to the rest of the world, as it lacks manufacturing capacity on the continent.
These are some of the facts you should know about why AfCFTA is an absolute beacon of hope for the African continent, and despite Covid, has the potential to create economic growth and stability for the continent in the decades to come. This is just the beginning of the African economic renaissance.
- As of December 4, 2020, 36 countries have already ratified the AfCFTA treaty, which was signed by 44 African countries in March 2018.
- AfCFTA eliminates tariffs on 90% of goods in Africa, tackles non-tariff barriers to trade and guarantees the free movement of persons.
- AfCFTA, once all African countries have come on board, will be the largest trading block in the world.
- This new free trade market is estimated to represent 1.2 billion people in Africa.
- AfCFTA represents a market with a combined gross domestic product (GDP) of $2.6 trillion.
- AFCFTA has the potential to lift 30 million Africans out of extreme poverty, according to the World Bank.
- This agreement has been almost 60 years in the making, since the founders of the Organisation of African Unity, later the African Union, conceptualised a vision of an Africa common market.
- AfCFTA is expected to boost intra-African trade, promote industrialisation, create jobs, and improve the competitiveness of African industries on the global stage, reports Africa Renewal.
- On a continent with the most youthful population in the world; as well as the largest number of women informal traders, it is expected to boost entrepreneurship and opportunities for young people, and especially women. There has been in fact a deliberate intent to be inclusive as regards women and youth; and the AfCFTA agreement actually requires countries “to protect the vulnerable and address corruption”.
- Intra-African trade is predicted to increase from the current cross-border trade of 18% to 50% by 2030, according to Mene.
Sources: United Nations, African Union, World Bank.
Louise Burgers is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.
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