The cohesion of states for the greater good has very many benefits. For example, the formation of the European Union created the European single market, which is the largest international single market in the world. The CETA union between the European Union and Canada has generated many opportunities for exports benefiting French companies, particularly small and medium-sized enterprises and intermediate-sized enterprises.
In Africa, several free trade areas have been formed. Some have failed and been revived while others have collapsed permanently. The Free Trade Areas allow the countries to import and export goods without any tariff barriers or non-tariff barriers to trade. They enable lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.
The most recent free trade area is the African Continental Free Trade Area (AFTA). This is an ambitious project to unite a group of countries, individuals and economies under a single market with freedom of movement of goods, services, capital and people. It aims to align policy, reduce costs, promote integration and realize sustainable and inclusive development across Africa. As of July 2019, 54 states had signed the agreement.
The anticipated benefits of the free trade area are numerous. For starters, the African Continental Free Trade Area will lead to healthy competition between these countries. If one country is producing low-quality goods, it will be forced to improve its ways to match up to its competitors from another free trade area.
African nations have battled corruption for decades, and perhaps the formation of ACFTA is the answer to this problem. When everyone follows the same rules-based system, there is less opportunity for participating nations to skew trade advantages toward favoured parties.
The ACFTA is also expected to improve innovation and efficiency within the nations. Healthy competition creates a need to be above the rest at all times. This means that competing brands will have to be on their toes at all times, researching and creating products that have a unique selling point above their competitors. This will go a long way in enhancing the technology that is within the region.
With the formation of AFCTA, it is anticipated that companies will increase their sales. Businesses will be able to dispose of their surplus production in these other countries. The expansion of these companies will lead to increased sales and profits. Consequently, there will be increased employment rates and improved standards of living throughout the continent.
The AFCTA provides the opportunity for Africa to create the world’s largest free trade area. It has the potential to unite 1.3 billion people and lead to a new era of development. Here are some of the other benefits – The Africa Continental Free Trade Area: Benefits, Costs and Implications