Africa had a historic moment on July 7, 2019, when the African Continental Free Trade Area (AfCFTA) saw the successful start of its operational phase during the 12th Extraordinary Summit of the African Union, held in Niamey. On March 21, 2018, in Kigali, the agreement known as the AfCFTA was adopted and made available for signature. It came into effect on May 30, 2019.
During “a roll call of honor” during the launch ceremony, the 27 nations that had approved the AfCFTA’s instruments as of July 7, 2019, as well as the 28 nations that had signed but had not yet ratified—with Eritrea being the sole member state still to sign—were announced.
On this occasion, a commemorative plaque was revealed along with the news that Ghana has been chosen to host the AfCFTA secretariat.
The acceptance of five crucial instruments marked the beginning of the operational phase.
The Origin Rules: a system that controls the circumstances in which goods and services can be transferred throughout the area duty-free
The Tariff Abatements:
The goal of 90% tariff liberalization has been agreed upon, and the timeframe is July 1, 2020. There will be an extra 7% over a ten-year period with a five-year transition for “sensitive products” that need to be liberalized. The internet system for tracking, documenting, and getting rid of non-tariff obstacles, such customs officers’ actions.
NTBs are a great hindrance to intra African trade whether physical, like poor infrastructure, or administrative like the behaviour of customs officials. These are to be monitored with a view to ensuring they are eliminated.
The Pan-African payment and settlement system:
To facilitate payments on time and in full, by ensuring that payments are made in local currency and at the end of the year there’ll be net settlements in foreign exchange. With the certainty of payments, there will be confidence in the system.
The African Trade Observatory:
A trade information portal to address hindrances to trade in Africa due to lack of information about opportunities, trade statistics as well as information about exporters and importers in countries. The trade observatory will have all this information and other relevant data which will be provided by AU member states
The significance of the African Continental Free Trade Area
The AfCFTA will be the largest free trade area since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050. Some of its expected benefits include:
Increasing trade among African countries which currently ranges between 15-18%.
Stimulate production through the development of regional value chains, to ensure that manufacturing, ANGLO processing and other activities across the continent are stimulated to supply the market.
