Everything about The African Continental Free Trade Area

The world will soon see the biggest trade agreement since the establishment of WTO as the African nations will put their signatures on the African Continental Free Trade Area (AfCFTA) in Rwanda. As per the estimates of UN Economic Commission for Africa the effective implementation of the agreement has the potential to boost the intra-African trade by 52 percent in next 5 years.


AfCFTA stands for a continental free trade area the negotiations for which were started in 2015. The agreement will cover 55 member nations from the African Union and will bind together 1.2 billion and give rise to a gigantic combined GDP of more than $2 trillion. The momentous deal seeks to waive off tariffs on 90 percent products while 10 percent items in the sensitive category will be factored in later. The agreement will relax barriers on services and also deal with non-tariff barriers which usually cause long delays at the border. There is thus a gradual shift towards a single currency and free movement of people within the trade area.

Advantage Trade

A single, large continental market for goods and services in the continent is aimed at boosting trade relations among the African countries. As per UNCTAD, the primary UN wing which deals with trade said the intra-African trade only comprise 10.2 percent of the total trade of the continent in 2010. The reserved trade relations amongst the African nations are a result of colonialism as the main trading relations were established between Africa and the West. It is expected AfCFTA will rectify this historical flaw. The continent today needs free trade to grow at par with the developed world. The main items of African exports to West between2010-2015 were dominated by fuels and manufactured goods while the trade within Africa largely comprised the manufactured products. There is a unique volatility seen in commodity prices which make the exports highly vulnerable and the commodity exports are capital intensive. Resultantly, there is a dearth of jobs and drain of youth towards West.


There are obvious challenges to the implementation of the deal as it requires the economies to be prepared and adaptable to the demands of globalisation. There will be an increase in competition which can have a spiral impact on salaries, especially in low-cost jobs. The African nations have to factor in the costs and consequences of the negative impacts while riding on the highs of the agreement.

The deal which is slated to be ratified on March 21, will need at least 15 signatories to come into effect. The clauses on investment, competition policy and intellectual property will be ironed out afterwards. A Secretariat will have to be established by African Union Commission which will preside over the agreement in future and take it to new heights.







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