When nations unite for trade and sustainable development, cooperation is more likely to succeed. The African Union (AU) formed the African Continental Free Trade Area (AfCFTA) in 2018. It covers 54 countries and has a potential market of 1.3 billion people.
The accord intends to establish a single market for products and services to further Africa’s economic integration. The trade area’s aggregate gross domestic product might be over $3.4 trillion, but reaching its full potential will necessitate considerable policy reforms and trade facilitation measures among African signatory countries.
The AfCFTA Secretariat is in charge of overseeing the agreement’s implementation. It is situated in Accra, Ghana, and facilitated by secretary-general Wamkele Mene.
According to the Tralac Trade Law Center, the agreement came into effect in May 2019 for the 24 countries that had deposited their instruments of ratification. Its operational phase started at the 12th Extraordinary Session of the Assembly of the AU 2019 at Niamey, Niger. As of September 2021, 38 members of the 54 signatories have submitted.
Africa has a wealth of natural resources and is the world’s largest free-trade zone. The AfCFTA is projected to help African countries execute the 2030 Agenda for Sustainable Development and accomplish the Sustainable Development Goals by boosting economic transformation. It also offers significant prospects for increasing intra-African trade and fostering environmental and social preservation. It is more than just a free trade zone. It is also the AU’s main project. Hence, many other AU programs align with AfCFTA’s commitments to industrial and infrastructure developments.
From a business perspective, how can this initiative affect your international expansion?
Intra-African Trade Optimization
Older border and transportation infrastructure, as well as a patchwork of rules across dozens of markets, have long hampered trade integration on the African continent. In addition, governments have frequently established trade barriers to protect their market from regional competition, making trading with close neighbors more expensive than trading with countries overseas. As a result, according to the United Nations Conference on Trade and Development (UNCTAD), Intra-African exports are far lower than in Europe, Asia, and America.
Integration of the African Workforce
The integration of the workforce will be a critical component in AfCFTA’s success. The Protocol on Free Movement of Persons, agreed by 30 African nations, aims to create a visa-free zone within the AfCFTA countries. However, this initiative faces setbacks as African nation economies vary in size, economic development, and diversification.
Indeed, AfCFTA’s integrated market will attract international companies to leverage this agreement. Hence, it will create jobs and learning opportunities for Africans. It will also enhance the productive capacity of the least developed countries in the region.
Olivia Yu has decades of experience in the Human Resources industry. She’s the Regional Director for Asia Pacific of a famous international HR company. Olivia’s international experience inspires her to write articles about human resources and global staffing.