The African free-trade zone comes into effect

The long awaited African free-trade zone came into force last Thursday, a step toward creating what the African Union (AU) hopes will be a continent-wide market of 1.2 billion people worth $2.5 trillion.

Fifty-two of the AU’s 55 member states have signed the agreement to establish the free trade area since March 2018, with the notable exception of Nigeria, the largest economy on the continent.

Some of Africa’s other economic heavyweights – including Ethiopia, Kenya, Egypt and South Africa – are among the 24 nations that have formally ratified it. In the last month, Zimbabwe and Burkina Faso joined the fold.

The operational phase of the Africa Free Trade Agreement will be launched at the African Union summit in Niger on 7 July.

Upcoming challenges & opportunities

There are still a number of outstanding issues to be resolved, including arbitration measures, certifying the origins of goods, tackling corruption and improving infrastructure.

Critics say poor infrastructure and a lack of diversity between the various economies could throw up barriers to this envisioned integration.

However, the AU envisions the African free-trade zone, once fully implemented, driving economic integration and spurring investment within the continent.

It hopes the progressive elimination of tariffs will help boost intra-Africa trade by 60% within three years. At present, only 16% of trade by African nations is with continental neighbors.

It is said that the African free-trade zone will help develop African economies long driven by a focus on resource exploitation and provide a platform for negotiating with markets beyond the continent.

Sources: ewn.co.za ; Africa News