According to top official, the Africa-wide free-trade agreement is unlikely to face any further delays even if a second wave of coronavirus infections hits the region.
In an interview at the Bloomberg Invest Global virtual conference on Tuesday, Wamkele Mene said: “If the pandemic continues into 2021, we will develop the necessary public-health protocols to continue with the implementation of the African Continental Free Trade Area”. The secretariat will take advice from health officials as it works to implement the deal. The free-trade agreement will also revive the economic growth on the continent.
The Africa-wide free-trade agreement entered into force legally last year. However, commerce due to have started on July 1 has been delayed as the pandemic set back negotiations. The negotiations are expected to lay the foundation for trade in goods, including tariff concessions. When fully operational by 2030, it could be the world’s biggest free-trade zone by area. It is estimated to have a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion.
Increasing Internal Trade across Africa
Fifty-four of the 55 nations recognized by the African Union have signed up to join the area, with Eritrea being the exception. 28 countries have subsequently ratified the agreement.
Nigeria, the continent’s biggest oil producer, has yet to ratify the deal because of concerns about trans-shipments. Trans-shipments can allow goods could enter the free-trade zone from countries that are not party to the agreement.
According to Mene, while the window to implement the deal is “very narrow,” African heads of state want it to move as quickly as possible. Increased trade could revive economic activity that has been affected by the virus. The virus has also highlighted the need for regional value chains across Africa.
Africa lags other regions/continents in terms of internal trade. Intra-continental commerce accounts for only 15% of the total, compared with 58% in Asia and more than 70% in Europe. The Africa-wide free-trade agreement is meant to help change this. It aims to lower or eliminate cross-border tariffs on 90% of goods and facilitate the movement of capital and people. It would also promote investment, and pave the way for the establishment of a continent-wide customs union.