AfCFTA: How Africa's Free Trade Agreement is Benefiting Businesses in 2023
What is AfCFTA
After roughly 6 years in the works, the African Continental Free Trade Area (AFCFTA) was finally formed in 2018. African leaders established it to create a centralized environment that would make doing business in Africa easier and boost Africa's economy.
It came into force in 2019, and by January 1, 2021, trading had commenced under the AfCFTA.
As of March 2023, 54 countries that are African Union (AU) member states have signed the agreement, and 46 of them have deposited their instrument of ratification, that is, their consent documents in support of the treaty, making it the world's largest free trade area.
Annexes were added to the agreement documents of the AfCFTA, which detailed all the requirements needed to operate under the guidance of the AfCFTA and can be found here.
Mission and Protocols of AfCFTA
Africa's Continental Free Trade Agreement, with its secretariat in Accra, Ghana, is aimed at boosting growth, reducing poverty, and broadening economic inclusion on the continent.
Its objectives include
1. Increase Africa's exports by $560 billion, with over 75% from the Manufacturing sector alone.
2. Remove 30 million Africans from under the rubble of extreme poverty and live on more than $5.5 per day, and boost the income of over 60 million others.
3. Increase the wage gains of men and women by 9.9% and 10.5%, respectively.
4. Boost Africa's income by 7%, up to $450 billion, and contribute $79 billion to the world's economy by 2035.
5. Improve both skilled and unskilled workers' wages by 9.3% and 10.3%, respectively.
Its protocols are divided into two phases
Phase one is focused on Trade in Goods, Trade in Service, Dispute Settlement, and Customs and Trade Agreement Facilitation.
Phase 2 is aimed at Intellectual Property Rights, Investment, Competition Policy, and Digital Trade.
All are to be achieved by 2063.
Benefits of AFCFTA
H.E. Wamkele Mene, Secretary-General of AFCFTA, stated in his opening remarks at the African Union Youth Town Hall Meeting in February 2023 that the first steps are to empower African Youths and understand and recognize their contribution to Africa's economy.
The Benefits of the AFCFTA include the removal of red tape to help businesses transact outside their geo-political zone, and ease them into the global supply chain. This alone would ensure a boost in income gains by up to $290 billion.
It will also facilitate the government's readiness to train more people for opportunities, which can help reduce unemployment and prevent job losses in African countries like Nigeria, whose unemployment rate currently sits at 43 percent.
Furthermore, the collaboration and dispute settlement avenues will ensure that African countries are better prepared against natural disasters, climate change crises, and general hazards like the COVID-19 pandemic.
This has already increased Intra-African trade by 20% in 2022, even though 52% was the target according to the Executive Secretary of the Economic Commission for Africa, Antonio Pedro.
Finally, since the AfCFTA is youth-centric, according to Mr. Mene, Africa has the largest youth population in the world, with 22.7% of the world's total youth population living in Africa. The initiative will make room for innovation, digital exploration, and creativity.
Some of the challenges the commission is facing are the issues of small and fragmented markets located across Africa, and Prof. Yemi Osibanjo, the Nigerian Vice President of AfCFTA, will overcome these challenges and put the initiative on the right path to 2063.
AfCFTA Office address
AfCFTA has no office in Nigeria for now, but conferences have been held in Abuja recently, The commission's headquarters is at African Trade House Ambassadorial Enclave, Liberia Road, Ridge, Ghana, and all inquiries should be directed to [email protected].
Be the first to comment!
You must login to comment