Thursday, May 30th 2019 will go down in history as the day the African Continental Free Trade Area (AfCFTA) came into effect. AfCFTA will officially enter into force during the next Extra-Ordinary Heads of State and Government summit, scheduled for July 7th.
The African Union initiated the Continental Free Trade Area project in January 2012, during the 18th ordinary session of the African Union Conference. The AfCFTA was enacted in 2018 at the Kigali Summit, and has been signed by 52 African member states to date. Nevertheless, to bring the agreement into force, 22 of those states must ratify the treaty and then deposit their instrument of ratification with the African Union.
It may have taken a while, but this has been finally achieved, and with 22 countries have deposited their instruments, the agreement can now take effect. Albert Muchanga, the commissioner of trade and industry for the African Union, tweeted that the agreement will “begin the journey of transformation to secure inclusive prosperity.”
The AfCFTA is now the largest free-trade zone in the world, creating a single market for goods and services designed to eradicate tariffs across a continent of 1.2 billion people with an aggregate GDP of over $2 trillion. The African Union hopes the free-trade zone will bring about economic integration and investment from within Africa. Thanks to the elimination of tariffs, the AU expects intra-continental trade to be boosted. Up to now, African countries don’t trade with each other very much: it accounts for only 16% of all trade involving the continent. The UN Economic Commission for Africa thinks this agreement could see intra-Africa trade rise to 25% by 2040. It will also allow companies to expand and enter new markets, as they will have more opportunities, African companies will find it easier to grow.
Nevertheless, Africa watchers remain downbeat about the prospects for implementation. Africa is clearly a land of contrasts, there is several regions with totally different economic situations, and a lot of national bodies with sharply divergent interests on trade. Many legal details are still being finalized, and experts warn that enforcing the agreement will be a challenge.