Africa shapes biggest free trade area since WTO to boost regional business ties
African heads of state signed the pact at a summit in Kigali, the capital city of Rwanda. The agreement may result in the biggest free trade area in terms of participating nations since the establishment of the World Trade Organization. The deal is expected to come into effect within six months and the leaders hope the plan will boost prosperity for 1.2 billion Africans.
“Our peoples, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic takeoff and perpetuate misery, even though Africa is abundantly endowed with wealth,” AU Commission Chair Moussa Faki Mahamat said.
The African Continental Free Trade Area (CFTA) is expected to erase such trade barriers as tariffs and import quotas, providing free flow of goods and services among members. The significant step is also aimed at diversifying from long-established commodity exports outside the continent, as the price volatility damages the economies of many nations.
“Less than 20 percent of Africa's trade is internal,” Rwandan President Paul Kagame said. “Increasing intra-African trade, however, does not mean doing less business with the rest of the world.”
The pact has not been supported by the rest of the union members, including South Africa and Nigeria. 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.
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The project was approved in 2012 and the members started working on the draft in 2015. Under the terms of the deal, the states are to decrease customs tariffs for 90 percent classes of goods. The participants are reportedly weighing the possibility of using a common currency.
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