African Free Trade Bloc Opens for Business

African Free Trade Bloc Opens for Business

African countries began officially trading under a new continent-wide free trade area on Friday.

The African Continental Free Trade Area (AfCFTA) brings together 1.3 billion people in a $3.4 trillion economic bloc that is now the largest free trade area since the establishment of the World Trade Organization.

The AfCFTA will boost trade among African neighbours while allowing the continent to develop its own value chains. The AfCFTA came into force on 30 May 2019 to create a free trade region among the African Union members, aiming to become the world’s largest free movement and single-currency union. The World Bank estimates that the bloc could lift tens of millions out of poverty by 2035.

“There is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant,” Ghana’s President Nana Akufo-Addo said during an online launch ceremony. As Reuters highlighted, however, free trade in Africa would need to overcome the region’s historic economic and political challenges, including poor road and rail links, political unrest, excessive border bureaucracy and petty corruption.

Trade under the AfCFTA was meant to be launched on July 1 but was pushed back after COVID-19 made in-person negotiations impossible.

As Secretary-General of the AfCFTA Secretariat Wamkele Mene noted, COVID-19 had demonstrated that Africa was overly reliant on the export of primary commodities and global supply chains. The global supply chains were severely disrupted during the pandemic. When estimating the coronavirus pandemic’s negative impact on global economy last March, the Organisation for Economic Co-operation and Development (OECD) predicted that continuing global supply disruptions could halve global economy growth.

Every African country except Eritrea has signed on to the AfCFTA framework agreement, and 34 have ratified it.

An annex to the deal outlining the rules of origin – an essential step for determining which products can be subject to tariffs and duties – has not been completed yet. So far, 41 of the zone’s 54 member states have submitted tariff reduction schedules.

Members must phase out 90% of tariff lines – over five years for more advanced economies or 10 years for less developed nations. Another 7% considered sensitive will get more time, while 3% will be allowed to be placed on an exclusion list, said Ziad Hamoui of Borderless Alliance, a group that campaigns for easier cross-border trade.

AfCFTA members recognise all the difficulties they will need to face to make the African free trade bloc work. “Economic integration is not an event. It’s a process,” said Silver Ojakol, chief of staff at the AfCFTA Secretariat. “We must start somewhere.”

The primary working languages of the African Union are Arabic, English, French, and Spanish, with Portuguese and Swahili being developed. The AfCFTA news regularly published by the Johannesburg-based Pan-African Parliament can be viewed here.

Image: Johannesburg, South Africa, by Rixie / Adobe Stock

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