23-Mar-2018: 44 African countries sign agreement to establish African Continental Free Trade Area.

The African Continental Free Trade Area (AfCFTA) has been signed by 44 African countries at a summit of the African Union in Kigali, Rwanda. If successful, it will be the biggest trade agreement since the formation of the World Trade Organization in 1995.

Nigeria, Africa’s largest economy and most populous country, as well as a host of others did not sign the agreement.

The AfCFTA has the potential to bring over 1.2bn people together into the same market. The bloc of 55 nations would be the largest in the world by member states. The AfCFTA could improve trade between African countries, which in 2016 estimates stated accounted for only 10%. By reducing barriers to trade, such as removing import duties and non-tariff barriers, African countries hope to boost intra-continental business.

Objectives of the AfCFTA:

1. Create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
2. Expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general.
3. Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
4. Enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

Background: African heads of government agreed to establish a continental free trade area in 2012 and started negotiations in 2015. The draft agreement commits countries to removing tariffs on 90% of goods, with 10% of “sensitive items” to be phased in later. The agreement will also liberalise services and aims to tackle so-called “non-tariff barriers” which hamper trade between African countries, such as long delays at the border. Eventually, free movement of people and even a single currency could become part of the free trade area.