Africa has done it • 54 out of 55 countries sign AfCFTA • 27 countries ratify agreement • Trading expected to start 1 July 2020

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Timo Shihepo  

Niamey - The world’s largest trade bloc, the African Continental Free Trade Area (AfCFTA), has finally entered into force with African leaders launching the operational phase last Sunday.

The AfCFTA is a trading bloc aimed at creating a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of the African customs union.

The AfCFTA removed any doubt that Africans can achieve anything significant together, especially at a time the world is moving in a different direction as far as Brexit and Donald Trump’s America-first policies are concerned.  

The AfCFTA will bring together all 55 African countries with a combined population of more than one billion people and a combined gross domestic product of more than US$3.4 trillion.

If successfully implemented, the free movement of goods and services, are expected to improve the way Africans travel as well as the traditional way of doing business on the continent. People and goods are expected to move and trade respectively without any hindrances that are found currently at member states’ borders. This would then also increase Africa’s intra-trade.

Intra-African trade stands at around 12% compared to 60%, 40%, and 30% intra-regional trade that has been achieved by Europe, North America and Association of Southeast Asian Nations (ASEAN), respectively.

According to an African Union report, in terms of global goods trade, the continent accounts for only 1.8% of imports and 3.6% of exports. These rates are even lower in the services sector with only 1.7% and 1.8% of imports and exports, respectively.

Analysts say the creation of a single market under the AfCFTA is expected to change all this and with the first phase, called the operational phase of AfCFTA, launched, the continent can now start to look at a better future.

The operational phase has five instruments to give substance to the launch before the first date of trading, which is 1 July 2020.

The five instruments are; African trade observatory dashboard; establishment of online non-tariff barriers monitoring, reporting and elimination portal; introducing of pan-African payments and settlement system; creating an AfCFTA password protected online negotiation portal; and the agreed rules of origin in appendix IV to annex on rules of origin.

The AU’s trade and industry department has recommended that trading under the AfCFTA should start on 1 July 2020.  The trade and industry department said this one-year transitional period will enable them to undertake critical preparatory activities. They identified points that need to be prepared before the starting date.

These are; state parties sensitizing their business communities about the emerging market as well as producing and distributing trade documents. The second point is convening a meeting of directors-general of customs of state parties to share information on their readiness for the start of trading. The third point is developing a framework of collaboration between the AfCFTA secretariat and regional economic communities on facilitation of intra-African trade. The last activity is to allow time for the businesses operating in Africa to scale up investments so that they are positioned to supply to the scale of an AfCFTA market of 1.27 billion people. Beyond production, there will be also be required investments in warehouses and other logistics infrastructure.

“With the launch of the operational phase, we are ready to do the necessary work,” AU’s trade and industry commissioner, Albert Muchanga told The Southern Times.

“We are ready to take the AfCFTA to the next level, which is implementation of the agreement. We are aiming to have an active and efficient market after the Niamey extraordinary summit operational phase launch of the AfCFTA,” he said.

Chairperson of the African Union, President Abdel Fattah el-Sisi of Egypt, said the operational phase of the AfCFTA was just the beginning and that the continent must continue engaging stakeholders in order to implement all the pending elements.

Executive Secretary of the Economic Commission for Africa (ECA) Vera Shongwe said some technical details remained to be finalised during this transitional phase up to 1 July 2020.

She said the United Nations stood ready to work in partnership with African countries as the continent moved to implement the free trade area.

She added that the world’s largest free trade area, encompassing 54 countries and 1.3 billion people, would bring the promise of trade-led economic growth closer to reality for Africa’s entrepreneurs, industrialists, investors, innovators and service suppliers.

“It will create jobs and contribute to technology-transfer and the development of new skills; it will improve productive capacity and diversification; and it will increase African and foreign investment. Perhaps most important of all, the African Continental Free Trade Area demonstrates the common will of African countries to work together to achieve the vision of the Africa Union’s Agenda 2063: the Africa We Want,” she said.

Moussa Faki Mahamat, Chairperson of the African Union Commission, said: “A dream, an old dream which is becoming a reality. Envisaged at the inaugural summit of the Organisation of African Unity (OAU) in May 1963, the African Continental Free Trade Area, which we are launching today is one of the most emblematic projects of the African Agenda.

“The founding fathers must be certainly feeling proud. Kwame Nkrumah, Jamal Abdel Nasser, Haile Selassie, Hamani Diori and others must finally be saying – at long last!”

 

 

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