In a continent housing 1.2 billion people with a GDP of more than two trillion dollars, the free trade agreement signed by 44 countries has brought to the birth of a liberalized market for goods and services across the continent.
The concept of continental Free Trade Area (CFTA) started in 2012 but its fruition six years later has led to unveiling of world largest trading block. The session that was chaired by AU leader, President Paul Kagame and chair of AU commission, Moussa Faki Mahamat, also saw 27 member states sign an agreement on free movement of persons.
The trade between African countries currently stands at 13%, this agreement will boost intra-African trade to 52%. The removal of trade barriers will not only boost trade but will also grow the kind of trade this continent needs. It will make the continent more competitive, increase the supply chain and boost productive capacities.
Africa has largely been outside the value chain and trade facilitation measures of international organization. Though it has often seen virtue concession like the EU concession, local value chains has not been created but instead it has brought closer links between producers from Africa and international buyers. The concept will create opportunities for value addition measures to feed local market demand in the continent and producers will have wider scope to trade hence increase production capacities.
The action plan on boosting intra-Africa trade, identifies seven clusters which include: trade policy. trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information and factor market integration.
The idea of lowering trade barriers, trade facilitation and bettering infrastructure is well intentioned. However by acknowledging that most African economies are very small to enable economic diversification and industrialization should definitely be a current consideration by member states. Still the unity that has been forged will enable a negotiated trade agreement among members and seal investments from partners.
The implementation of this agreement will attract more investment into the continent. Countries such as China, Turkey, India and the EU have already set up camp. Hopefully member states will also invest in each other.
With CFTA getting a green light, there is a lot to learn. The model market block such as Asia and Europe is perhaps what the continent is eyeing. The objective of this, will certainly lead African countries into better realization of their own markets. It will unite member states and make a real common market with better opportunities for investment, trade, movement of people and infrastructure development.
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