African Continental Free Trade Area to lift Africa from poverty
AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier to trade within and benefit from th ...
African Continental Free Trade Area (AfCFTA) is the continent's most ambitious integration initiative that targets 55 member states, covers a market of 1.2B people & GDP of $2.5T across the 55 States.
It will be the world's largest free trade area since WTO.
However, with average tariffs of 6.1%, businesses currently face higher tariffs when they export within Africa than when they export outside.
AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier to trade within and benefit from the growing African market.
According to H.E. Wamkele Mene, Secretary General- AfCFTA, African Continental Free Trade Area is not just a Trade Agreement.
"This is our hope for Africa to be lifted up out from poverty," he stated at the start of trading ceremony recently.
He added, "54 countries out of 55 have signed this agreement. 33 have ratified this agreement. Over 40 countries have submitted their offers which signals that Africa is ready to start trading today on the basis of new rules and new preferences that will ensure that the African market is integrated."
"We are working closely with our partners to develop digital technology platforms that will enable connectivity of SMEs and young Africans to benefit from AfCFTA."
Wamkele added, "We have to dismantle the colonial African model that we inherited and sustained over the last 50 years.
We have to stop being exporters of primary products to countries of the North and establish industrial development capacity and self-reliance in the African continent."
H.E. Cyril Ramaphosa, President of the Republic of South Africa and current Chairperson of the African Union said there can be no development without peace in Africa.
"We should speed our efforts towards the implementation of the African Union master plan of silencing the guns. It is time to turn our commitments into actions," he added.
According to H.E. Moussa Faki Mahamat, Chairperson of the African Union Commission, based on agreed rules of origin and tariff offers from 41 countries and customs unions, as of today, Africa is in a position to start trading on over 81% of products on preferential terms.
"All other agreements of AfCFTA will be concluded by July 2021," he pointed out.
H.E. Nana Akufo Addo- President, Ghana alliterated that "There is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant."
Amina J Mohamed- Deputy Secretary General of the United Nations added that "the UN will continue to work with African Union family members to make AfCFTA work. The new deal has the potential to transform potential for Africa into reality and can help reduce tariffs and non-tariff barriers."
Additionally, Prof. Benedict Oramah, President of the African Export-Import Bank (Afreximbank) confirmed that 400 African banks are already on board to start AfCFTA and will increase to 500 banks soon with combined $8bn trade finance capacity in the next 18 months.
Latest status of the AfCFTA
As at December 5, 2020, 34 countries have deposited their instruments of ratification: Ghana, Kenya, Rwanda, Niger, Chad, Eswatini, Guinea, Côte d'Ivoire, Mali, Namibia, South Africa, Congo, Rep, Djibouti, Mauritania, Uganda, Senegal, Togo, Egypt, Ethiopia, Gambia, Sahrawi Arab Democratic Rep., Sierra Leone, Zimbabwe, Burkina Faso, São Tomé & Príncipe, Equatorial Guinea, Gabon, Mauritius, Central African Rep., Angola, Lesotho, Tunisia, Cameroon and Nigeria.
It has been indicated that parliamentary/Cabinet approval has been obtained by Somalia, Algeria and Zambia; confirmation is pending.
Overview state of play
The operational phase of the AfCFTA was launched during the 12th Extraordinary Session of the Assembly of the Union on the AfCFTA in Niamey, Niger on 7 July 2019.
Estimates show AfCFTA has the potential both to boost intra-African trade by 52% by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.
Main objectives of the AFCFTA
Dr Peter Mathuki CEO, East African Business Council (EABC), which is a focal point for AfCFTA in East Africa said, African Continental Free Trade Area is mandated to among others; create a single market for goods, services, facilitated by free movement of persons, create of a liberalized market for goods and services through successive rounds of negotiations.
Mathuki added that African Continental Free Trade Area is also mandated to contribute to the movement of capital and natural persons and facilitation of investments, lay the foundation for the establishment of a Continental Customs Union and promote and attainment of sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties.