I am inclined to guess that you are asking, what AfCFTA is, that is if you have not heard about it. Well AfCFTA is an acronym for African Continental Free Trade Area which is a free trade area encompassing most of Africa, it was established in 2018 by the African Continental Free Trade Agreement. The world’s largest free trade area brings together the 55 Countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs).
One of the flogship projects of Agenda 2063 is for a high ambition Africa with a comprehensive scope that includes; investment protection and digital trade among others. By eliminating barriers to trade in Africa, the AfCFTA objective is to boost intra-Africa trade, especially trade in value-added production and generally trade across all sectors of Africa.
We all know that the World Trade Organization is the largest free trade area, well there’s something huge already up and that is the African Continental Free Trade Area which has 43 parties with 11 signatories, the current head of the AfCFTA being Wamkele Mene who is the General Secretary. One would wonder how this amazing idea came about, well do not think too much about it because I will give you all the answers. The African Continental Free Trade Agreement was brokered by the African Union (AU) and signed by 44 of its 55 member states in Kigali, Rwanda on 21 March 2018.
You would want to know what the AfCFTA members are committed to; 1. To eliminate tariffs on most goods and services over a period of 5, 10 or 13 years all depending on the country’s level of development or nature of products. 2. Committed to creating a single liberalized market. 3. Reducing barriers to capital and labor to facilitate investment. 4. Establishing a continental customs union. Developing regional infrastructure.
The AfCFTA is blissfully committed to growing Africa by boosting intra-African trade. Its aims are as follows; 1. Reduce poverty. 2. Make Africa more competitive in the global economy. 3. Increase socio-development economy.
In 2022, the AfCFTA established the Pan-African Payments and Settlements System (PAPSS) which allows payments among companies to be done in local currency, wow isn’t this great. This reminds me of Lucky Dube’s song “different color, one people”, technically speaking we are from different African countries but we are “one people” irrespective of the diversity in cultures.
With all sorts of development, there will always be the negative side just as Public Integrity Centre economist Celeste Banze stated that one of the disadvantages of the AfCFTA is non-tariff barriers (with the gradual elimination of customs duties over a period of 10 years) in the framework of foreign trade, which could overload public expenditure in the country’s current context.
You may question how a member state will benefit, let’s take Ghana as an example; the operationalization of the AfCFTA in Ghana would significantly boost its food security, enhance economic growth, balance of trade, stimulate investment and innovation, diversify exports, and provide jobs for the youths in Africa.
I do not know if some people are ready to embrace AfCFTA, but I urge us all to open our minds to this great initiative which will take Africa a long way.