The Objective of the African Continental Free Trade Area as stated on the African Union website are to:
- Create a single continental market for goods and services, with free movement of business, persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
- Expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general.
- Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
- Enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
This Continental trade agreement was signed yesterday with the exclusion of Nigeria who bade more time to consult on the agreement. This is arguably one of the biggest agreement to be signed by African countries. The terms of the agreement would pose very beneficial to Africa in the long run. And also open up some countries to trade affairs thereby boosting their revenue.
In the terms of the agreement, African countries are to remove tariffs on 90 percent of goods, with 10 percent of “sensitive items” will be phased in later. Countries would have to determine what “Sensitive items” would be. “Removing barriers to trade is expected to not just grow trade within Africa, but also grow “the kind of trade this continent needs”.” This was noted by a David Luke, coordinator of the African Trade Policy Centre at UNECA.
The trade agreement would also lead to the free movement of Africans through African countries and maybe a Single currency for all African countries in the future. This in my opinion should be put off for now till it is established that the free trade has benefited all participating countries. And hence improved the value of their individual currency before agreeing to a merger of currency power and single currency.
“Removing barriers to trade is expected to not just grow trade within Africa, but also grow “the kind of trade this continent needs”.
With Nigeria pulling back on signing the agreement suggest that there might be uneven grounds to the unified front of Africa free trade. It is most likely that some regions will benefit more from this than others. African countries who generate their revenue from exports would almost be at the losing end of this agreement unless they being to manufacture.
The free trade zone is more focused on reducing tariffs placed on products produced by Africans within Africa. Critical attention should be paid however to Industrialization within the Africa zone. This will ultimately improve how Africa is perceived around the world.