When it comes to the African Continental Free Trade Area (AfCFTA), there’s no need for introduction, anymore. AfCFTA is the largest free trade area in the world, uniting 55 members of the African Union (AU) and eight Regional Economic Communities (RECs). It has an overarching goal of establishing a single continental market with a combined GDP of around US$3.4 trillion and a population of over 1.3 billion.
One of the centerpiece initiatives of Agenda 2063: The Africa We Want, the African Union’s long-term development plan for making the continent a worldwide superpower, is the AfCFTA.
The AfCFTA is to Africa what the European Union Free Trade is to Europe. Both groups, in a nutshell, were designed to foster economic cooperation within their respective continents to reduce their reliance on other markets too far from their respective regions.
According to the official agreement document between member states, the primary objective of AfCFTA is to create a single market for goods, and services, facilitated by the movement of persons to deepen the economic integration of the African continent and by the Pan-African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063.
With that in mind, here are 5 important notes to note about this pro-African business initiative:
- Purpose: The African Continental Free Trade Area (AfCFTA) is an agreement between African countries aimed at promoting intra-African trade and economic integration. The goal is to create a single market for goods and services, with free movement of people and capital, in order to boost economic growth and development in Africa.
- Coverage: The AfCFTA covers all 55 African Union member states, with a combined population of over 1.3 billion people and a GDP of more than US$3 trillion.
- Key provisions: The agreement includes provisions for the elimination of tariffs on goods, the liberalization of trade in services, the protection of intellectual property, and the promotion of investment. It also includes commitments to improve infrastructure, enhance food security, and support the integration of small and medium-sized enterprises into the regional market.
- Benefits: The AfCFTA is expected to boost economic growth and development in Africa by increasing trade and investment, creating jobs, and reducing poverty. It is also seen as a way to improve market access for African countries and increase their competitiveness in the global market.
- Challenges: Despite the potential benefits of the AfCFTA, there are also significant challenges to its implementation. These include the need for harmonization of regulations, lack of infrastructure and transportation networks, and limited capacity for trade negotiation among African countries. There are also concerns about the impact of the AfCFTA on certain sectors, such as agriculture and manufacturing, and the need to ensure that the agreement is inclusive and benefits all African countries and their citizens.
