The African continent has massive untapped potential. Despite its rich supply of natural resources and its youthful population, it continues to lag behind most of the world in terms of economic development, a reality which many attribute to both colonialism and the failure of African states, post-colonialism to sufficiently invest in infrastructure development.
In March 2018, at an African Union summit held in Rwanda, a major breakthrough was made that could revolutionise the continent’s economy. During the session, 44 countries signed up to a continent-wide free trade agreement that, if ratified, will create the largest single market in the world.
African Continental Free Trade Area (AfCFTA) is the first agreement of its kind to bring together all 55 African countries under a single Free Trade Area (FTA), with a focus on creating a common market for goods, services and investment and allowing the free movement of persons. Heads of State from the African Continent, decided to establish the AfCFTA in 2012 at the 18th ordinary session of the AU, and negotiations formally commenced in June 2015. AfCFTA stems from the realisation that intra-African trade is critically low and that regional economic communities (RECs) have not prioritised developing and enhancing regional trade sufficiently
AfCFTA follows the establishment of the Tripartite Free Trade Area (TFTA), a free trade area between COMESA, SADC and the EAC. It aims to overcome regional divisions by building on the TFTA’s regional industrial development policies and strengthening trade among the various RECs, with the aim of incorporating all African economic blocs under standardised rules and regulations.
The African Continental Free Trade Area (AfCFTA) hopes to modernise a trading landscape that remains hampered by high tariffs, non-existent infrastructure and regional fragmentation. If it is successful, it will become the largest free trade zone in the world and could play a leading role in lifting millions out of poverty. It also complements the AU’s Agenda 2063 and the UN’s Sustainable Development Goals, and is an important tool that can advance inclusive growth through industrialisation and increased opportunities for African citizens.
Although the signing of the AfCFTA agreement in March 2018 signalled commitment from African leaders to work towards deeper African economic integration, it can only come into effect if a minimum of 22 AU members ratify it.
To date, 49 out of the 55 AU countries have signed the AfCFTA agreement, with only 6 countries namely Rwanda, Kenya, Niger, Chad, Ghana and eSwatini, having ratified it.
There is a general expectation in the AU that the required minimum of 22 ratifications is feasible and that the AfCFTA will come into being. It will come into effect 30 days after ratification by the parliaments of at least 22 countries. Each country has 120 days after signing the framework to ratify.
The final steps for the AU will be to persuade the remaining countries to join – specifically Nigeria, to create a secretariat to coordinate the implementation and to provide enough resources to ensure the AfCFTA’s success.
While the AfCFTA is not the panacea for Africa’s woes, it does constitute a single undertaking by African countries to work together for their mutually beneficial development