Advantages Of African Continental Free Trade Agreement

UNCTAD is also assessing the impact of the agreement on subsector employment (Figure 4). Paul Brenton is a leading economist in the World Bank`s Trade and Regional Integration Unit (ETIRI). It focuses on analytical and operational work in the area of trade and regional integration. While there are many opportunities, important questions remain about the pace and scale of AfCFTA implementation. Africa is a highly fragmented continent, with its composite economies, at very different stages of socio-economic development. In addition, many African nations have long suffered from a lack of economic integration and regional cooperation, a large one of which is a product of over-inflating from colonial commercial structures and transport networks. African leaders from 44 African nations met at the African Union summit in Kigali, Rwanda, March 17-21, 2018, and signed the Continental Free Trade Agreement (AfCFTA) for the creation of the world`s largest internal market. The agreement will be the largest trade agreement in history since the creation of the World Trade Organization. (1) Perhaps most importantly, Nigeria signed the AfCFTA at the meeting.

Ensuring the participation of Africa`s largest and most populous economy has been a considerable achievement. Nigeria`s signature was made following a lengthy domestic policy consultation with both trade unions and private companies. The country accounts for 17% of Africa`s GDP, just ahead of South Africa, and with an internal market of nearly 200 million people – as much as Ethiopia and Egypt combined – its commitment will significantly strengthen the strength and size of afCFTA. The pact aims to boost intra-African trade by making Africa a single market of 1.2 billion people and a combined GDP of more than $3.4 trillion. The United Nations Economic Commission for Africa (UNECA) estimates that the implementation of the agreement could increase intra-African trade by 52% by 2022 (compared to the 2010 trade level) and double the share of intra-African trade (currently about 13% of African exports) by the beginning of the next decade. (2) (8) Over the period 2012-2016, industrial products accounted for 43% of intra-African exports, compared to only 20% of exports to the rest of the world. In 2015, medium and advanced technology products accounted for 25.4% of intra-African trade, but accounted for only 14.1% of African exports to industrialized countries and 13.7% of the continent`s exports to the world (Chart 2).