African leaders establish continental free trade area

Forty-four African countries have signed an agreement establishing the African Continental Free Trade Area (AfCFTA) in Kigali, the capital city of Rwanda.

The signing took place on Wednesday during the 10th Extraordinary Session of the Assembly of the African Union (AU) on the AfCFTA. According to the AU, 19 African heads of state and government attended the summit.

The countries that signed the AfCFTA agreement include Niger, Rwanda, Chad, Angola, Kenya and Ethiopia, among others.

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.

The agreement will be submitted for ratification by state parties in accordance with their domestic laws.

At the opening session, ahead of the signing ceremony, AU Commission Chairperson Moussa Faki Mahamathad called the day “historic”, marking a new step in Africa’s march towards greater integration and closer unity.

“Beyond the debates about what some countries might gain or lose in the short term, the truth, statistically established, is that each of our member states and the continent as a whole will benefit immensely from the establishment of the free trade area,” he said.

The AfCFTA is the culmination of a vision presented nearly 40 years ago in the Lagos Plan of Action, adopted by African heads of state and government in 1980.

“The promise of free trade and free movement means prosperity for all Africans, because Africa is prioritising the production of value-added goods and services that are ‘Made in Africa’,” said AU Chairperson and Rwanda’s President Paul Kagame.

He said the advantages Africa gains by creating one African market will also benefit the continent’s trading partners around the world.

Africa will also be in a better position to leverage its growing strength and unity to secure Africa’s rightful interests in the international arena.

“This is not just a signing ceremony. Today’s deliberations are critically important as we chart the next steps on our journey towards the Africa we want,” he said on Wednesday.

The decision to form the AfCFTA was adopted in January 2012 during the 18th Ordinary Session of the Assembly of Heads of State and Government of the AU while AfCFTA negotiations were launched by the AU in 2015.

The AU is set to hold another summit in Mauritania in July where countries such as Nigeria and South Africa – who had reservations on signing the AfCFTA – can make their choice.

Benefits of the African Continental Free Trade Area

The AfCFTA is aimed at creating a single continental market for goods and services with free movement of businesses and investments. This will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and cater to and benefit from the growing African market.

Eventually, free movement of people and even a single currency could become part of the free trade area. This, according to the AU, will pave the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.

The AfCFTA will make Africa the largest free trade area created in terms of the number of participating countries since the formation of the World Trade Organization, according to the AU.

It could also create an African market of over 1.2 billion people with a Gross Domestic Product of 2.5 trillion US dollars, the pan-African bloc said.

The AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and cater to and benefit from the growing African market.

The UN Economic Commission for Africa estimates that the AfCFTA has the potential both to boost intra-African trade by 53.2 % by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.

Together with the signing of the agreement on the AfCFTA, 27 African countries also signed the Protocol to the Treaty establishing the African Economic Community on Wednesday relating to free movement of persons, right of residence and right of establishment.