The AfCFTA was to commence on July 1, 2020, but due to the Covid-19 pandemic, it was deferred to give African countries ample time to contain the spread of the coronavirus.
The launch of AfCFTA is historic because it is the largest free trade area in the world by virtue of the number of participating countries since the development of the World Trade Organisation.
The agreement establishing the AfCFTA was signed by leaders from 44 African countries at the AU Summit held in Rwanda in March 2018.
On January 1, 2021, African countries officially opened their markets under the Africa Continental Free Trade Area (AfCTA) pact and duty-free trading of goods and services across borders.
On this same day, the United Kingdom’s Brexit kicked-off, officially marking the end of the frosty UK-European Union relationship.
The AfCFTA was to commence on July 1, 2020, but due to the Covid-19 pandemic, it was deferred to give African countries ample time to contain the spread of the coronavirus.
The launch of AfCFTA is historic because it is the largest free trade area in the world by virtue of the number of participating countries since the development of the World Trade Organisation.
The agreement establishing the AfCFTA was signed by leaders from 44 African countries at the AU Summit held in Rwanda in March 2018.
Thus far, 35 of the 54 African countries have ratified the trade pact. The AfCFTA will create a single market for goods and services, facilitate the movement of people, promote industrial development, sustainable and inclusive socio-economic growth and will help in resolving the multiple membership issue in line with AU’s Agenda 2063: The Africa We Want.
As the world’s largest single market, the AfCFTA is estimated to have a market of over 1.2 billion people with a combined Gross Domestic Product of Sh275 trillion.
AfCFTA is expected to grow intra-African trade particularly the intra-African exports which currently stands at 16.6 per cent compared with 68.1 per cent in Europe and 59.4 per cent in Asia, 55 per cent in America and seven per cent in Oceania as per UNCTAD’s economic development in Africa Report 2019.
This single continental market is a critical tool that will offer a perfect response to Africa’s development challenges.
The World Bank estimates that successful implementation of the AfCFTA will lift over 30 million Africans out of extreme poverty, raise incomes of 68 million Africans who live below the daily wage — a majority of whom are women and youth.
It will also boost intra-African trade, promote industralisation, create job opportunities and improve the competitiveness of African industries and their products in the international markets. The agreement will also cut red-tape and simplify customs procedures that would drive Sh2 trillion of the Sh49 trillion in potential income gains.
AfCFTA is an avenue for dealing with the problem of youth and women unemployment in Africa through job creation. Youth unemployment in Africa stands at 60 per cent of the continent’s total joblessness according to the World Bank Reports. Worst still, women are the most affected by unemployment than men.
The opening up of free trade area offers youth and women in small and medium enterprises (SMEs) greater opportunity to be principal players in regional value chains by opening up continental markets for supplying inputs to larger enterprises in cross-border trade.
With the digital economy and e-commerce growing fervently, youth and women will benefit immensely by leveraging on Africa’s digital infrastructure to maximise existing opportunities through AfCFTA.
Lack of capital has been a key challenge for youth and women-led start-ups and AfCFTA will provide new innovative ways of providing credit for e-commerce through cross-border crowd funding initiatives. Africa, unlike Europe, Asia and Americas, lags behind in nurturing youth talent.
The successful implementation of this single market which allows for free movement of persons, offers youth and women an opportunity to explore their talent fully and ply their trade anywhere on the continent.
Additionally, AfCFTA places emphasis on opportunities for women entrepreneurs focusing on women in informal cross-border trade, gender and regional value chain analysis and affirmative action / preferential public procurement.
Youth and women must take a leading role to reap the maximum benefits that comes with the continental free trade area.
The writer is an economist and a commentator on trade and investment. Twitter: @BenShawAyieko Email: [email protected]
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