Post by Trade Forum on Jul 20, 2021 12:56:07 GMT 1
African Continental Free Trade Area (AfCFTA): Free Trade To Help Africa Beat Recession
Recall that trading under the African Continental Free Trade Area (AfCFTA) kicked off finally on January 1st, 2021 with great excitement after being delayed for about six (6) months due to the Covid-19 pandemic.
The African Continental Free Trade Area is a free trade area founded in 2018. It was created by the African Continental Free Trade Agreement among the 54 of the 55 African Trade Unions with headquarter in Accra Ghana.
This agreement features protocols on trade in goods, trade in services, investments, intellectual property rights, and competition and dispute settlements.
To date, 35 of the 55 African Union member states have ratified the agreement, this means that the AfCFTA is in effect for those countries but not for others. Nigeria is among those member states that have ratified the agreement.
Also fifty-four (54) African Union (AU) member states have signed the AfCFTA with the exception of Eritrea.
The AfCFTA is uniting an estimated $3 trillion market and could help realize more than $84 billion in untapped intra-African exports.
This report is according to the African Export-Import Bank (Afreximbank). Mr. Wamkele Mene the Secretary-General of the AfCFTA said at a recent interview during a trip to Angola that restrictions have slowed down the process due to Covid-19 pandemic.
Protocol on Free Movement of Persons
Nigerians should understand that the protocol on the movement of persons is not part of the instrument yet. It is not part of the African Continental Free Trade Agreement. It was negotiated separately; it has not entered into force.
The issue of free movement of persons is very crucial for commerce to flow in the African continent.
Single Currency for Africa
The Secretary-General also said that the issue of single currency for Africa is a long-term objective, but that AfCFTA is currently working with Afreximbank to take a step in establishing a Pan-African Payment and Settlement Platform.
It is going to be a digital platform for facilitating trade; this will be a step towards eventually establishing an African single currency.
He also said that the AfCFTA is working with banks to make sure that there is a finance component that supports the implementation of the AfCFTA.
The Covid-19 pandemic has affected trade in Africa very severely. He lamented that for the first time in over 30 years, there is a technical recession affecting the whole of Africa now.
The Secretary-General assured that through the implementation of AfCFTA that Africa will come out of the current recession.
African nations are now in the process of establishing customs procedures that are necessary to make sure that goods crossing into their countries through the border are applying rules of AfCFTA.
He admonished that the process takes time and the administration is doing all it can to make the processes come through soon.
This is a new era in Africa’s Development journey, with this Africa will over time eliminate import tariffs on more than 97% of goods traded on the continent.
The questions to be asked are numerous, but a nagging one is this; will the implementation of this agreement really increase production in many African countries to match demand?
Take for example the case of Nigeria, importation of petrol and cars has been gulping much of the country’ scarce foreign exchange. Will the implementation of AfCFTA make African countries come into the picture?
Nigeria recently reduced the duty on cars from 35% to 5%, who will benefit from this action? How many African countries produce such cars that are usually imported into the country?
Is it that European and other producers will be direct beneficiaries of such policy? Or are we expecting Foreign Direct Investment (FDI) to be an outcome of such policy?
However, we believe that increased trading activities between African countries must have an impact on the economies of African countries. These increased activities will surely result in increase in employment leading to higher consumption benefiting the economies of the continent.
We believe in Africa and also believe that increased trade between African countries with little or no restrictions will greatly improve the lot of poor Africans.
Stay with us as we continue to bring to you more details as they unfold.
Recall that trading under the African Continental Free Trade Area (AfCFTA) kicked off finally on January 1st, 2021 with great excitement after being delayed for about six (6) months due to the Covid-19 pandemic.
The African Continental Free Trade Area is a free trade area founded in 2018. It was created by the African Continental Free Trade Agreement among the 54 of the 55 African Trade Unions with headquarter in Accra Ghana.
This agreement features protocols on trade in goods, trade in services, investments, intellectual property rights, and competition and dispute settlements.
To date, 35 of the 55 African Union member states have ratified the agreement, this means that the AfCFTA is in effect for those countries but not for others. Nigeria is among those member states that have ratified the agreement.
Also fifty-four (54) African Union (AU) member states have signed the AfCFTA with the exception of Eritrea.
The AfCFTA is uniting an estimated $3 trillion market and could help realize more than $84 billion in untapped intra-African exports.
This report is according to the African Export-Import Bank (Afreximbank). Mr. Wamkele Mene the Secretary-General of the AfCFTA said at a recent interview during a trip to Angola that restrictions have slowed down the process due to Covid-19 pandemic.
Protocol on Free Movement of Persons
Nigerians should understand that the protocol on the movement of persons is not part of the instrument yet. It is not part of the African Continental Free Trade Agreement. It was negotiated separately; it has not entered into force.
The issue of free movement of persons is very crucial for commerce to flow in the African continent.
Single Currency for Africa
The Secretary-General also said that the issue of single currency for Africa is a long-term objective, but that AfCFTA is currently working with Afreximbank to take a step in establishing a Pan-African Payment and Settlement Platform.
It is going to be a digital platform for facilitating trade; this will be a step towards eventually establishing an African single currency.
He also said that the AfCFTA is working with banks to make sure that there is a finance component that supports the implementation of the AfCFTA.
The Covid-19 pandemic has affected trade in Africa very severely. He lamented that for the first time in over 30 years, there is a technical recession affecting the whole of Africa now.
The Secretary-General assured that through the implementation of AfCFTA that Africa will come out of the current recession.
African nations are now in the process of establishing customs procedures that are necessary to make sure that goods crossing into their countries through the border are applying rules of AfCFTA.
He admonished that the process takes time and the administration is doing all it can to make the processes come through soon.
This is a new era in Africa’s Development journey, with this Africa will over time eliminate import tariffs on more than 97% of goods traded on the continent.
The questions to be asked are numerous, but a nagging one is this; will the implementation of this agreement really increase production in many African countries to match demand?
Take for example the case of Nigeria, importation of petrol and cars has been gulping much of the country’ scarce foreign exchange. Will the implementation of AfCFTA make African countries come into the picture?
Nigeria recently reduced the duty on cars from 35% to 5%, who will benefit from this action? How many African countries produce such cars that are usually imported into the country?
Is it that European and other producers will be direct beneficiaries of such policy? Or are we expecting Foreign Direct Investment (FDI) to be an outcome of such policy?
However, we believe that increased trading activities between African countries must have an impact on the economies of African countries. These increased activities will surely result in increase in employment leading to higher consumption benefiting the economies of the continent.
We believe in Africa and also believe that increased trade between African countries with little or no restrictions will greatly improve the lot of poor Africans.
Stay with us as we continue to bring to you more details as they unfold.
