On May 30, an agreement on the creation of the African Continental Free Trade Area (AfCFTA) came into effect.
Analysts say that this is the world largest FTZ after the creation of the WTO in 1995! In all, AfCFTA covers 52 African countries out of 55 member states of the African Union. It was this continental integration organization that mediated in the negotiation process, which ended with the signing on March 21, 2018, of the agreement in Kigali (Rwanda).
The document provides for the abolition of 90% of customs tariffs and will ensure the free movement of goods on the continent. Procedurally, the agreement enters into force 30 days after its ratification by 22 signatory states. The initiative to create an AfCFTA as a concept appeared in 2012, and work on the text of the agreement was started in 2015. The creation clause of AfCFTA is a fundamental point of the Agenda 2063 strategy developed by the African Union.
On April 29, 2019, the Sahara Arab Democratic Republic (SADR) became the 22nd country that ratified the AfCFTA, having transferred its instruments of ratification (accordingly, when the 30 days expired, the document entered into force). The next step will be the operational phase of the implementation of the agreement, which will begin on July 7, 2019 - after the first semi-annual coordination meeting of the African Union and regional economic communities are held in Niamey (Republic of Niger).
The African Union aims to create a continental-wide market with 1.2 billion consumers and a turnover of 2.5 trillion dollars. According to estimates by the African Export-Import Bank, inter-African trade as of 2019 represents only 15% of the total trade volume of African countries.
For comparison: this indicator in Latin America reaches 20%, and in the Asian region - 52%. If AfCFTA works, inter-African trade from 2020–2030. will double, by 30%. AfCFTA is the first step on this path. The participants still need to agree on a number of issues for the transaction to work fully. Firstly, these are procedural issues: the mechanisms of arbitration, confirmation of the origin of products, anti-corruption measures, improvement of the existing infrastructure (combating the idleness of goods in ports). Second, Benin, Nigeria, and Eritrea remain outside the AfCFTA.
If, however, Nigeria joins the pan-African FTA, then, according to UN experts, the volume of inter-African trade in 5 years after that will increase by 50%. The re-elected President of Nigeria, Muhammad Bukhari, is actively exploring the arguments for revising the Nigerian policy on AfCFTA.
Against the background of Brexit, the US-China trade war, tensions in trade relations in the US-EU-Japan triangle, African countries have a unique chance to become successful in their mega-trading project. Accordingly, Ukraine must finally pay more attention to this issue and prepare to expand its presence in African markets.
A step in this direction should be not only dialogue at the bilateral level, but also the intensification of Ukraine’s relations with the African Union and sub-regional African economic blocs, such as ECOWAS, EAC, IGAD, SADC, and ECCAS.
This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.