17. May 2023 · Write a comment · Categories: Uncategorized

African Leaders Sign Continental Free-Trade Agreement: What Does it Mean for the Continent?

In March 2018, African leaders gathered in Kigali, Rwanda to sign what has been hailed as the largest free-trade agreement since the creation of the World Trade Organization. The Continental Free-Trade Agreement (CFTA) is expected to promote intra-African trade and boost economic growth across the continent. The agreement has been signed by 44 countries, with 11 others yet to sign.

For decades, economies in Africa have heavily relied on exports of raw materials such as oil, minerals, and diamonds. This has left the continent vulnerable to external economic shocks and hindered its ability to diversify its economy and create more jobs. Intra-African trade has also been poor, accounting for only 16% of the continent`s total trade, compared to more than 60% in Europe.

The CFTA seeks to address these challenges by creating a single market for goods and services, with free movement of goods, people, and capital. By eliminating tariffs and non-tariff barriers, the agreement is expected to reduce the cost of doing business and increase the competitiveness of African businesses.

The potential benefits of the CFTA are vast. It could increase the continent`s GDP by $450 billion, boost intra-African trade by 52%, and create more than 2 million jobs, according to estimates by the UN Economic Commission for Africa.

However, the implementation of the CFTA is not without challenges. Many African countries have weak infrastructure, such as roads, ports, and electricity, which hinders access to markets and raises the cost of doing business. The agreement also requires significant political will and coordination among member states, which can be difficult in a continent with a history of economic and political nationalism.

Moreover, there are concerns that the CFTA could expose small businesses to competition from larger firms, particularly from countries with more advanced economies. This could lead to the displacement of local producers and hinder the development of domestic industries.

To mitigate these risks, the CFTA includes provisions for special and differential treatment for least developed countries, as well as measures to address non-tariff barriers, intellectual property, and competition policy.

Overall, the CFTA is a significant step towards a more integrated and prosperous Africa. By promoting intra-African trade and creating a single market, the agreement could transform the continent`s economy, propel industrialization, and create opportunities for growth and development. However, its success will depend on the commitment of member states to implement it effectively and address the challenges that lie ahead.

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