Earlier this month The Gambia became the 22nd African country to ratify the African Continental Free Trade Area (AfCFTA). Following Gambia’s ratification, the AfCFTA has now reached its twenty-two member threshold and the trade area will begin to be implemented later this year.
In June 2015, African Heads of Government agreed to the creation of a continental free trade area by 2017 at the African Union Summit in South Africa. The agreement was later signed in Kigali, Rwanda on March 21, 2018. Since its introduction, fifty-two of the fifty-five African Union members have signed the agreement.
The African Union hopes to create a single common market embracing all countries in Africa.
Once implemented, the agreement will immediately remove tariffs on 90 percent of goods that are traded between the member states. The remaining 10 percent of tariffs on “sensitive goods” will be phased out over time.
Last week, I was invited on to the Cato Institute’s Daily Podcast to talk about the AfCFTA. I discussed how the AfCFTA could boost intra-African trade whilst providing further opportunities for Africa to trade with the outside world.
However, I believe the AfCFTA is not without its challenges. Nigeria, Africa’s largest economy, remains reluctant to support the agreement, in part due to the lobbying success of the nation’s powerful trade unions. Similarly, if member-states are unwilling to adopt policy measures to strengthen their rule of law and property rights, the potential benefits of the AfCFTA may not come to fruition.