The African Continental Free Trade Agreement (AfCFTA) is an agreement among African Union member states to remove tariffs on goods traded between them. It officially came into effect on January 1, 2021, and is expected to create the world`s largest free trade area in terms of participating countries.
The agreement was first signed in March 2018 and has been ratified by 54 out of the 55 African Union member states. The only country that has yet to ratify the agreement is Eritrea. The AfCFTA aims to increase intra-African trade, promote industrialization, and create jobs across the continent.
With a population of over 1.3 billion, the AfCFTA is expected to create a market worth $3.4 trillion. This would make it one of the largest trading blocks in the world. The agreement expects to boost trade among African countries by 60% within the first decade of its implementation.
One of the major benefits of the AfCFTA is that it will reduce the cost of doing business within the continent. Currently, African countries trade more with other regions of the world than with each other. This is due to high tariffs, red tape, and other trade barriers. By removing these barriers, the AfCFTA will make it easier for businesses to trade within the continent.
The agreement is also expected to promote industrialization in Africa. By creating a larger market for goods and services, the AfCFTA will encourage the growth of local industries. This will, in turn, create more jobs and boost economic growth.
However, there are also concerns that the AfCFTA may cause some African countries to lose revenue from tariffs. This could result in a budget shortfall for these countries, which may have a negative impact on their economies. The agreement also needs to address non-tariff barriers such as corruption, lack of infrastructure, and security issues.
The AfCFTA is a significant step towards economic integration in Africa. It is expected to bring benefits such as increased trade, job creation, and economic growth. However, there are also challenges that need to be addressed. With sound implementation and a focus on addressing challenges, the AfCFTA has the potential to change the economic landscape of Africa and improve the lives of its citizens.