The African Continental Free Trade Area (AfCFTA)
The AfCFTA is a legal instrument that creates an African market for goods and services through the elimination of tariffs, the removal of non-tariff barriers, liberalisation of services, and cooperation in customs arrangements and other regulations. The African Continental Free Trade Area (AfCFTA) was signed in March 2018, ratified by the required number of countries by May 2019, and came into force in January 2021. The AfCFTA is one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063.
The AfCFTA will be the largest free trade area since the formation of the World Trade Organization (1994) in terms of participating countries. As of May 2022, 43 of the 54 signatories had deposited their instruments of ratification with the chair of the African Union Commission, making them state parties to the agreement.
- The Trade Area will bring together Close to 1.3bn people across Africa creating an area with a combined gross domestic product of around $3.4 trillion. (Expected to increase by 1% to 3% once all tariffs are eliminated, according to UNCTAD estimates.)
- Upon full implementation it is expected to have lifted 30 million people out of extreme poverty,
- It promises to increase intra-African trade by 33% once full tariff liberalisation is implemented and enhanced regulatory harmonisation and coordination.
- In fact, under a successfully implemented AfCFTA, Africa will have a combined consumer and business spending of $6.7 trillion by 2030 and $16.12 trillion by 2050,
- It is expected to improve the competitiveness of African industry and enterprises through increased market access, the exploitation of economies of scale, and more effective resource allocation.
- According to UNECA, full implementation of the AfCFTA by 2040 will raise intra-African trade by 15 to 25 percent, or $50 billion to $70 billion.
The scope of AfCFTA is great. The agreement will reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. Full implementation of AfCFTA would reshape markets and economies across the region and boost output in the services, manufacturing, and natural resources sectors.
The African Continental Free Trade Area is the first large-scale agreement on deep integration in Africa to cover areas such as services, investment, competition policy, intellectual property rights, and digital trade.
The AfCFTA Secretariat, an autonomous body within the African Union based in Accra, Ghana, and led by Secretary General H.E Wamkele Mene, is responsible for coordinating the implementation of the agreement.