Talks for the African Continental Free Trade Area (AFCFTA) began in Jun 2015 will now pay off as CNBC writer Minasse Wondimu Hailuore confirms that more than 50 African heads of state have gathered in Kigali, Rwanda, to sign a free trade agreement that would result in the largest free trade area in terms of participating countries since the formation of the World Trade Organization(WTO). The single African market, AFCFTA, is touted to be the biggest free trade area due to the populous region it serves, the huge resources and youthful human capital.
The signing of the African Continental Free Trade Area (AFCFTA) to establish a single African market will increase intra-Africa trade above its current low level of 13%. The trade pact will unite the 55 member countries of the African Union in a tariff-free trade and is expected to stimulate economic growth, industrialization, improved infrastructure development as well as business diversification.
The trade agreement which is described by the African Union as encompassing a market of 1.2 billion people and a gross domestic product of $2.5 trillion will deal with non-tariff barriers, technical trade obstacles and customs procedures. The agreement will also accommodate a framework to deal with transit issues between countries as well as improve the African continent prospects hence attracting more investors.
The creation of the AfCFTA will provide new export opportunities for African products whose combined GDP stands at USD 3 trillion, covering over 1.2 billion people. It will also create a border-less Africa in terms of trade in goods, services, jobs, investment, free movement of people, intellectual property rights and competitiveness.
Kenya Foreign Affairs and International Trade CS Ambassador Monica Juma said that the movement is to open up the continent to itself & to everybody and also to shift from country-based markets to the huge continental-based market. “The creation of the AfCFTA is a major milestone where all countries, including Kenya, can freely access huge markets like those offered by South Africa and Nigeria,” said Kenya Industrialization CS Aden Mohammed. He also added that those starting businesses in Africa can set base in Kenya but still access the entire African market hence they will no longer complain about small markets in countries of operation. Rwandan President Paul Kagame who is also the current chairperson of the AU said in a speech that less than 20 percent of Africa’s trade is internal and increasing intra-African trade does not mean doing less business with the rest of the world.
Only 22 out of the 54 nations of the continent are required to sign and ratify the new protocol to make it operational after it is domesticated by respective parliaments of each country.
Should the deal be signed, second phase talks on investment, competition and intellectual property rights are expected to begin later this year.
Although the Nigerian President Muhammadu Buhari and Ugandan President Yoweri Museveni will not be attending the summit in Kigali, Rwanda, there is confidence that other African leaders including the Kenyan President Uhuru Kenyatta, will sign the deal.
The World Trade Organization which was formed in 1995 comprises of 164 members.