- The Africa Continental Free Trade Agreement (AfCFTA) on Thursday, May 30, officially became a law
- The agreement seeks to promote more intra-trades among African countries by reducing the tariffs on exports
- One of the major problem the new agreement will face is that Nigeria, the largest economy on the continent, is not a signee to the agreement
On Thursday, May 30, the African Continental Free Trade Agreement (AfCFTA) official became a law after years after it was signed.
According to the Council on Foreign Relations, the agreement which seeks to establish the largest free trade area in the world, was signed by all but three countries in Africa.
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The AfCFTA is the biggest free trade pact after the World Trade Organisation in 1995, and it promises to cover over 1.2 billion people with more than $3 million in Gross Domestic Product (GDP).
Economic expert, however, submit that though the agreement seeks to unlock growth with the continent’s economic potential, there are still challenges in its implementation.
It should be noted that the African Union (AU) first launched the AfCFTA negotiations back in 2015 with the hope that it would help intra-African trade.
At that time, only 15% of African exports go to other African countries, which is low when compared to the intra-trade in Asia and Europe which are 58% and 67% respectively.
One of the major problems where this is so is in the area of high tariffs on exports among African countries as countries on the continents find it relatively easy exporting to other non-African countries.
The reasons for the low tariff to countries in Europe or Asia could be pinned to the colonial infrastructures that had already been put in place during the colonial era.
Another challenge that the agreement may face is the overlapping membership of African countries, especially in the eight Regional Economic Communities (RECs), which could hinder its standardization of trade and enforcement.
AfCFTA therefore seeks to, among other things, cut tariffs on goods in the intra-African countries by 90% as it create uniform regulations.
Another benefit of the agreement is that it would protect African countries against the stealing of its resources by colonial countries.
The renegotiation of tariffs, the implementation and the absence of Nigeria, Africa’s largest economy and the most populous, as one of the signees will be the biggest setbacks for AfCFTA.
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Meanwhile, Legit.ng earlier reported that President Muhammadu Buhari said the implementation of the federal government’s Made in Nigeria for Exports (MINE) will generate 30 billion dollars and create 1.5 million jobs by 2025.
MINE is a presidential special priority intervention programme implemented by the Ministry of Industry, Trade and Investment, but under Buhari’s direct supervision.
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Source: Legit
