African countries sign deal for free trade blocs
- Author: Sonia Alvarado Mar 24, 2018,
Mar 24, 2018, 10:29
"For Africa, after decades of independence, marked by persistent under-development and a marginal place in the worldwide system, the terms of the debate are laid down in nearly Manichean terms: Unite or Perish, as Kwame Nkrumah said at the Addis Ababa founding Summit", African Union Commission chairman Moussa Faki Mahamat told heads of states and governments at the signing ceremony.
"Given the size of its economy, population, and given its political clout, Nigeria's stance towards the African Continental Free Trade Area is key", Imad Mesdoua, senior consultant for Africa at Control Risks, a global risk consultancy with offices in Lagos, told CNBC via email.
In 2015, the AU launched the AfCFTA negotiations.
Prospects are that free movement of people and even a single currency could become part of the free trade area as the case with the European Union (EU). Although, the absence of signatures did not completely halt AfCFTA's establishment, it certainly hurts the image and uniting agenda of the African Union.
The agreement would establish the world's largest free trade area through an agreement that covers the trade of goods and services, investments and intellectual property rights. Analysts say that if the deal is signed by all member-states, the united African market may reach a combined GDP of $2.2 trillion.
The AU Commissioner for Trade and Industry, Mr Albert Muchanga, urged countries that were yet to complete national consultations to do, saying they would have another chance of signing at the next AU summit.
According to the UN Economic Commission for Africa (ECA), the Organization's development arm in the region, the agreement has the potential both to boost intra-African trade by 52.3 per cent by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.
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"The stakes are enormous for Africa, but also for the entire global economy, to which Africa will contribute an ever-greater share in the decades ahead", said President Kagame.
"The AfCFTA also provides for mechanisms on addressing non tariff barriers which has been a major hindrance to intra-African Trade".
At a time when the rest of the world is coming together and consolidating itself in the resolute defence of its strategic interests, African countries have no choice but to forge ahead, said Mahamat.
And while Africa's largest economies are expected to benefit most from the deal, some of them worry that more people from poorer countries will migrate their way.
"With the CFTA, the manufacturing sector would be much more diversified, as the market would not be a few million people, but potentially 1.2 billion people", he said.
Governments now have the next six months, by September this year, to ratify the protocol.