ADDIS ABABA, The trading phase under the African Continental Free Trade Area (AfCFTA), signed by 54 of the 55 countries in Africa, begins from Jan 1, 2021.
The deal unites an estimated $3 trillion market, and could help to realise more than $84 billion in untapped intra-African exports, according to a new report by the African Export-Import Bank (Afreximbank).
African leaders at a virtual summit in early December held that trading start on Jan 1 as scheduled on the AfCFTA agreement and requested institutions to provide technical and financial support for its implementation.
Africa could be the world’s biggest free-trade zone by area when its treaty becomes fully operationally by 2030. The bloc has a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion.
The accord “will fundamentally change the economic fortunes of our continent,” South African President Cyril Ramaphosa, who holds the AU’s rotating chairmanship, said in a speech.
“It is the start of a new era of trade between African countries, when the continent will produce the goods and services it needs, when its economies will grow, industrialize and diversify, when it will realize rhe great potential of its abundant natural resources.”
Sao Tome’s minister for foreign affairs Edite Tenjua says the deal presents new but solvable challenges.
“It naturally presents as any new agreement some challenges, in our opinion of air link, of movement of people in the region itself, but I believe that they are challenges, that we as we move forward in the process will be able to resolve, there is of course also the issue of customs tariffs, although we are talking about free movement. But on the list and on the products that we are going to consider as priority products for the country, so there is a whole organisation that has to be done”, Tenjua said.
Countries now have to harmonise custom and tariff regimes. There are currently eight regional economic blocs in Africa.
According to the UN Economic Commission for Africa (ECA), the Eastern Africa region is anticipated to generate US$ 1.8 billion in welfare gains and benefit from over 2 million jobs from the successful implementation of AfCFTA.
Trading was originally planned to start on July 1, 2020 but the pandemic struck leading to the suspension of negotiations.
For Intra-African trade, 90 per cent of all goods will become tariff free from Jan 1 for all the countries that have deposited their instruments of AfCFTA ratification with the chairperson of the African Union Commission (AUC). A total of 36 countries have already completed this procedure.
With all the African countries, except Eritrea, participating, the AfCFTA would have the largest number of member countries in any trade deal since the formation of the World Trade Organization.
By giving a boost to intra-regional trade in manufacturing, AfCFTA is expected to increase employment opportunities, and help women get into the workforce. It can result in gradual altering of global supply chains, especially for products that require relatively lesser skills.
Source: NAM NEWS NETWORK