Denis Opudo
The struggle to unite all the 55 African countries has always been unsuccessful in the past. But this came to pass on 21st March 2018. The African head of states signed an agreement that will bring the African Union together. The African Continental Free Trade Area (AfCFTA) agreement will develop a free trade between the African countries. Moreover, it will create one African market for goods and services. Movement of investments and businesses will be free without any tariffs. This will speed up the formation of the African customs union. Furthermore, it will speed up the formation of Continental Customs Union.
Free trade will help Africa to realize its untapped potential in foreign investment. The region will also enjoy an increase in trade liberation. The idea of starting AfCFTA was first initiated in 2012 by the African Union (AU). The initiative is in a position to develop an African market of above 1.2 billion individuals with a GDP of $2.5 trillion. The move will do away with tariffs on inter-border trades. It will make it easier for African countries to trade with each other freely. Different African countries will benefit from the growing African market.
AfCFTA has the ability to improve the intra-African trade by 53.2%. It can do this by eliminating import duties and non-tariff duties. This is according to the United Nations Economic Commission for Africa (UNECA). The initiative is more than just a mere trade agreement between countries. Moreover, it will bring the inclusiveness and industrialization of African countries. The industrial export sector will be the highest beneficiary of the initiative. The sector is key in diversifying the continent’s trade. Furthermore, it will shift Africa from extraction products. The products have in the past accounted for a larger percentage of Africa’s exports. Moving away from extraction exports will bring in more inclusive. Moreover, it will bring in a sustainable trade. The two do not depend on the fluctuation of commodity prices.
The AfCFTA is not only important to Africa alone but to the outside regions too. The initiative will help in developing a strong foundation for foreign investors. This is because there will be a big market for foreign direct investment. Many international investors are now shifting their attention to investing in Africa. The likes of G20 are playing an important role in offering an enabling environment to foreign investors. Those doing business with Africa will benefit a lot and the private sector will get a huge market. Foreign investment will hence help to improve the living standards of the locals. For instance, they will create job opportunities for the locals.
