Africa Free Trade: What Is The AfCFTA?
It’s the largest trade bloc in the world since the creation of the World Trade Organization. The African Continental Free Trade Agreement (AfCFTA) was officially launched on May 30 after several years of negotiations.
It brought together all but one nation on the continent under a trading umbrella. Eritrea is the only non-signatory to the accord in the 55-member bloc but said it would consider signing the agreement in the future.
AfCFTA has been touted as “a game changer”. Its trade terms cover more than 1.2 billon people and more than $3 trillion in gross domestic product. It promises to unlock Africa’s economic potential by improving trade terms amongst nations on the continent and helping countries focus on their strong areas in agriculture, industry and services.
The trading bloc will be headquartered in Accra, Ghana.
Under the trading bloc, 90 percent of goods will be liberalized over the course of five-to-eight years. This is estimated to lead to a 52-percent increase in intra-African trade, according to the African Union.
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It is still not clear when the impact of AfCTA will start to trickle down to the people of Africa. Leaders are still negotiating terms of engagement on matters such as which products will be liberalized, said Archie Matheson, head of policy and analytics at Botho Emerging Markets Group, in an opinion piece.
“All this suggests that the intra-African trade benefits of AfCFTA will neither be as imminent nor as large as suggested by the widely-cited 52.3-percent figure,” Matheson said.
At the moment, African countries trade only about 16 percent of their goods and services among one another, compared to 65 percent between European countries.