RWANDA – African leaders from 44 countries have signed to the continental free-trade agreement, meant to open-up the continent through regional integration and economic growth.
The deal to create the African Continental Free Trade Area (AfCFTA) was signed at the 2018 African Union member states summit, attended by 44 out of 55 African countries.
With a combined GDP of $2.2 trillion and more than 1 billion people, the agreement seeks to unlock intra-African trade and movement of people, with UNCTAD projecting that an integrated Africa can boost regional trade by 56% in a decade after the coming on-stream of the deal, when it us finally implemented.
The agreement seeks to boost intra-Africa trade, which stands at around 10% of all trade across the continent, but waits a formal consent by individual countries, report Aljazeera.
According to the agreement, African countries will remove tariffs on 90% of goods, with 10% of ‘sensitive items’ set to be included later.
In addition, it will ensure free trade in services and might in the future include free movement of people and a single currency.
Speaking at the Summit, the AU Commission Chair Moussa Faki Mahamat said the aim was to have AfCFTA come into force by the end of this year, second phase of negotiations set to be held to cover investment, competition policy and intellectual property.
“Our peoples, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic take-off and perpetuate misery, even though Africa is abundantly endowed with wealth,” said Mahamat.
AfCFTA an initiative of the AU, was adopted in January 2012 during the assembly of the African heads of states in Ethiopia.
It was adopted with an objective to 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.
While the decision was welcome by some alluding to the fact that the agreement creates a huge market, others pointed to potential job losses and adverse effects on the development of domestic manufacturing capabilities.
“Competition tends to have a detrimental impact on wages in low-cost jobs, so countries need to think about how they’re going to address that situation,” said Eyerusalem Siba, a research fellow at the Brookings Institution’s Africa Growth Initiative.
Nigeria, one of the continent’s economic ‘powerhouses’ did not sign the agreement, her decision supported by the Manufacturers Association of Nigeria (MAN) who said that the deal would lead to gross unemployment at home as most local companies would die ‘a quicker death.’