The African Continental Free Trade Area Agreement Is A Move in the Right Direction Despite Expected Challenges

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The seed for establishing a continental free trade area was sown way back in January 2012, in Addis Ababa Ethiopia, African Heads of States passed a decision to form the Africa Continental Free Trade Area by 2017. That dream came to fruition on 20 March 2018, after 44 heads of states agreed to sign the African Continental Free Trade Area (ACFTA) agreement. A move which-according to the United Nations Economic Commission for Africa (UNECA), could potentially increase intra-African trade by 52 % by 2022.

“The Africa we want is clearly visible on the horizon today more than ever before, and so too is the road we will travel together to get there. As we trade more amongst ourselves, African firms will become bigger, more specialized and more competitive internationally,” said Paul Kagame, President of Rwanda.

According to the African Economic Outlook 2017 report by the African Development Bank, intra-African trade stood at 16 % of Africa’s total trade in 2016, a paltry figure compared to the European Union and Asia who are way above 50%. This is despite a large diversity in the nature of goods currently exported by the different countries, for instance, mineral-rich Botswana could benefit from agriculturally productive countries like Kenya-opportunities that have often not been fully exploited until now.

 

The African Union headquarters is based in Addis Ababa, Ethiopia [File: Jonathan Ernst/Reuters]. Image from https://www.aljazeera.com/news/2018/03/african-continental-free-trade-area-afcfta-180317191954318.html
Under the African Continental Free Trade Area agreement, 44 signatories will cut tariffs on up to 90 % of goods traded, commit to working on improving infrastructure and border posts. For members of the 27 countries who signed an additional agreement, this includes free movement of people that is bound to increase the competition for and quality of labour.

On the other hand, trade agreements and pacts are not always rosy nor do they last forever; for instance, the UK pulled out of the European Union (EU) after 45 years of membership (reasons among which  was economic stagnation, that was prevalent in some EU countries more than others – southern Europe had a 20 % unemployment rate compared to Germany’s 4.2 %).

Eleven countries have refused to join the Africa Continental Free Trade Area, led by Nigeria whose President, Muhammadu Buhari indicated that the continental aspirations didn’t match the country’s national goals. A statement reiterated by the National Labour Congress (Nigeria’s apex trade union organization), who termed it as a threat to the county’s economy. Considering the trade agreement envisions the free movement of labour across countries, the possible increased competition for Nigerian jobs has worried Nigeria’s labour movement.

Here is what you need to know about it – African Continental Free Trade Area: What you need to know

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