Africa set for a massive free trade area

Africa set for a massive free trade area

We are only as strong as we are united, as weak as we are divided.

BY Antony Mutunga

Africa’s largest economy, Nigeria, finally signed onto the AfCFTA – the continent’s most promising attempt yet at a continental free trade area – after months of holding off. To also sign on the day was Benin, leaving Eritrea as the sole country yet to come on board. 

It’s obvious why Nigeria’s participation and endorsement is significant. It’s not just Africa’s most populous country with some 200 million people; it’s also the continent’s largest economy, with a GDP of more than USD 405bn. Based on that and its stature in international relations, Nigeria’s support was indispensable for AfCFTA’s success.

The free trade area of about 1.2 billion people and a GDP of around USD 2.5 trillion promises to be the largest trading bloc in the world. Its advocates also say it gives hope of growing intra-African trade beyond its currently low level of around 17 percent. Tariff and non-tariff barriers (the many documents exporters must carry which cause long delays at African borders) make intra-African trade costlier than Africa’s trade with other regions. In comparison, the levels of Africa’s trade with other continents have historically been much higher. If the continent wants to achieve the socio-economic development encapsulated in the Sustainable Development Goals and Agenda 2030, AfCFTA could be a game changer.

For Nigeria, this could be a win-win. Some of the country’s banks are already doing business in more than a dozen African countries. Aliko Dangote, Africa’s richest man, has multi-billion dollar cement plants operating across the continent. Its booming movie industry, known as Nollywood, is already a household name across Africa. The country’s music industry too stands to gain from a single African market. The logic is that, when businesses thrive, more workers are hired who will then plough back their wages into the economy, thus boosting growth. That would ensure prosperity for millions of Nigerians working in those sectors.

More than this, Nigeria also opens up its large market to the rest of Africa and vice versa. This is expected to boost intra-African trade past its current low percentage. According to Brookings Institution, intra-African exports made up only 19 percent of total trade in 2018 as compared to 69 percent and 59 percent for intra-Europe and intra-Asia trade respectively. With Nigeria able to trade with other African countries riding on AfCFTA’s tariff and non-tariff reductions, it will be able to compete with China as the manufacturing hub for the continent.

The AfCFTA brings Africa’s dream of a single market of more than 1.2 billion people and a cumulative GDP over $3.4 trillion that much closer to reality. Even though there is still a lot to be determined and finalised before the agreement is fully implemented, the bigger task is to unite the continent beyond trade. During the 12th Extraordinary Summit of the African Union, a decision to commence trading under the agreement on July 1st, 2020 was placed. There will be a need for Eritrea to sign and all members to ratify and ensure AfCFTA works well.

But signing the treaty is the easy part. Ensuring that it works is the hard one. Africa doesn’t have a good track record in implementing agreements made in the past. What prevented earlier treaties from working must not be allowed to frustrate the implementation of AfCFTA. (

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