In a move touted as a game-changer, African countries launched a continent-wide free-trade zone on Sunday that brings together 54 nations and unites a market of over 1.3 billion people in a bloc worth $3.4 trillion.
The African Continental Free Trade Area (AfCFTA) – the world’s largest free-trade area – has been in the works for the last four years and will be headquartered in Ghana, Reuters reported.
Intra-trade across Africa has lagged behind other regions with only 17 percent of its exports to other African countries curtailed by tariffs as high as 25 percent.
Competing and overlapping trade-zones including the East African Community, the Southern African Development Community, the Common Market for Eastern and Southern Africa and the Economic Community of West African States have not made much progress in building a common market.
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Only the Economic Community of West African States and the East African Community are currently working on a common currency and passport respectively.
Nigeria, the largest economy in Africa, and Benin were the last to join AfCFTA. Nigeria’s reluctance was partly due to its minimal benefit from the economic bloc due to it is over-reliance on oil exports.
A report by the United Nations Conference on Trade and Development said the new trade pack among African countries could fail because of the current trade patterns which would make it difficult for members to remove at least 90 percent of the tariffs.
