AfCFTA is the newest pendulum of the global FTA network, considered to mould Africa’s economic potential. It intends to trigger GDP growth, raise employment, and stabilise economies across the African continent, creating a single African market for goods and services.
AfCFTA requires the member countries to exclude 90% of tariffs, granting free access to merchandise, goods and services. It also simplifies customs procedures and advances further by the movement of white-collar and blue-collar workers, healthy competition, intellectual property and investments. A recent publication from Baker Mckenzie stated that, as of April 2021, AfCFTA has 36 countries sanctioned with their agreement and 54 countries in Africa have signed the agreement, with Eritrea being the only nonsignatory party.
Trading under AfCFTA activated from 1 January 2021. It is acknowledged as a timely reinforcement to encourage intra-continental trade and enhance inter-continental collaboration in a period of increasing seclusion.
The agreement is already making headway and headlines. For example, South Africa is among the first to harvest the benefits by combining its solid manufacturing base and substantial networks across the continent with AfCFTA terms. Similarly, smaller countries such as Ghana and Côte d’Ivoire are seeing a rapid improvement in trade thanks to their open economies, favourable business environment and top-grade infrastructures.
AfCFTA recognises the lack of competent leadership and trade support as critical factors and aims to address them continuously. According to Ghanaian President Nana Akufo-Addo, the COVID-19 pandemic has amplified the significance of the AfCFTA’s success more than presumed.
Some of the significant challenges that AfCFTA faces are lacking proper infrastructure, inferior trade logistics, regulatory constraints, uncertainty in financial markets, regional warfare and intricate customs processes. These can affect trade development more than imposing tariffs. In the aftermath of COVID-19, these challenges can be subdued but only with more major trade and support.
If everything works smoothly and AfCFTA unlocks its truest potential, the proposed benefits would spread globally. For example, defeat poverty in Africa, improve the export portfolio, attract FDIs, expedite economic growth, enrich women’s lives, and promote the concept of “Trade Integrity” by ensuring authenticity and transparency of transactions. According to the World Economic Forum, AfCFTA is becoming the global vanguard that demonstrates what can be accomplished with robust decision
making and forward-thinking
