In 2018 the agreement establishing the African Continental Free Trade Area (AfCFTA) was signed.
The agreement is expected to transform markets in the continent for the benefit of Africans.
Some of its key goals include the establishment of a single market and the liberalisation of African markets.
In 1957, six European nations collaborated to form the European Economic Commission. The Treaty of Rome was entered into and a regional European economic bloc was formed. Sixty-five years later, the European Union (EU) is arguably the most powerful political and economic regional bloc in the world.
It is a regional bloc comprising 27 member states who partner in various aspects like commerce, trade, citizenship, free movement of goods and people and many others. The EU’s impact is felt globally and has shaped a lot of political and economic decisions.
In 2021, African heads of state met and agreed to fast track and boost intra-continental trade and establish a free trade area. In 2018 the agreement establishing the African Continental Free Trade Area (AfCFTA) was signed. As of 2021, 36 out of the 54 African countries had ratified the agreement.
The agreement is expected to transform markets in the continent for the benefit of Africans. Some of its key goals include the establishment of a single market and the liberalisation of African markets.
What this means is that African states will gradually open up their borders for intra-African trade in goods and services.
Some of the benefits of the AfCFTA means that it will become easier to import and export goods and services.
Due to the gradual harmonisation of trade practices, it will become easier and cheaper to export and import goods and services to another African country. This is beneficial as it will enable expansion to other countries.
Opening up the borders to trade means that there will be higher competition in the market.
Market share
The consumers will benefit from this as suppliers will improve quality and cut prices to gain market share. Liberalisation brought about by the integration has a positive impact on consumer welfare.
One of the main benefits of the bloc to African states is that the continent will have a stronger voice to negotiate power in global political and trade affairs.
The AfCFTA may give a platform for African countries to speak with one voice on global issues. The AfCFTA is set to be the largest regional bloc in the world given the size and population, which is an advantage.
African nations can also deal decisively over continental trade issues that affect the African states.
One of the issues that can be handled by AfCFTA is counterfeits and trade in illicit and sub-standard goods.
African nations can through the bloc harmonise trade practices to minimise such. Through the AfCFTA the continent can deal with dumping by creating strong laws against the practice.
National borders
Already the AfCFTA has passed protocols on some issues. Meaning there is some level of implementation already going on. One of them is the Protocol on Trade In Services. Article 10 of the Protocol provides for mutual recognition agreements (MRAs).
Experts operating in a country are awarded licences by the national professional bodies and the license limited them to the national borders. If they sought to offer services in another country, they had to similarly seek licensing, which often had stringent requirements for foreigners.
For example, a Kenyan advocate could not practice in a Ugandan court unless one had a licence.
Article 10 of the Protocol opens up trade in services to allow countries to mutually recognise licences and other approvals. This is to be done progressively, however.
What this means is that in the future and subject to the signing of MRAs and passing of sector regulations in member states, it may be possible to export your professional services to other jurisdictions.
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