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The African Continental Free Trade Area (AfCFTA); Stimulating Intra-African Trade

  Feb 28, 2020

The African Continental Free Trade Area Agreement (AfCFTA) entered into force on 30th May 2019 which the first phase of the deal taking effect for 24 countries.

The AfCFTA is a regional trade agreement among African countries that aims at pushing for stronger economic collaboration between neighboring countries to bring about better transportation, infrastructure, and eventually better trade. Furthermore, it aims to establish a single market for goods, services, facilitated by the movement of persons to deepen the economic integration of the African continent.

Other objectives include eventually developing a customs union spanning the continent’s countries; slashing tariffs and removing non-tariff barriers; and improving intra-country cooperation in investment, IPR, customs and trade facilitation, competition policy and other trade-related areas.

It is ardent that the African continent begins speaking in one voice: regional trade integration will play a major role in opening new markets thus causing an explosion of the African economy.

By establishing a unified market that includes the free movement of labor and investments, the continent will be able to attract the much-needed investments from foreigners.

Most African economies are generally very small in size, but collectively, they will have a Domestic Product of 2.5 trillion USD, thus a very attractive investment opportunity. This will more so give the continent bargaining power when it comes to foreign investment deals. As a region, Africa has a potential investment opportunity of up to 1.2 billion USD, very attractive for any investor, for sure.

It is also important to note that the agreement can increase intracontinental trade, today, less than a fifth of all exports are currently from one African country to another African. Kenya, for instance, exports 1 billion USD worth of products yearly to Europe and up to 500 million US dollars to the United States of America. In contrast, in 2017, Kenya exported only 69 million USD worth of products to Ethiopia citing high trade taxes.

The Economic Commission for Africa cites the AfCFTA as a major booster of regional trade in the continent. “The AfCFTA can boost regional trade by nearly 1 billion USD,” reads the report in part.

The World Development Report – 2020 by the World Bank states, “Global value chains trade is more than four times larger between countries sharing a deep trade agreement than between countries with no trade agreements.”

Movement between countries in the continent has been an immense challenge essentially brought about by erroneous visa processes, tedious custom clearance, excessive border controls, and expensive air tickets among others.


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