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Africa Practice: The world's largest Free Trade Area comes into force - Or does it?

Africa Practice views on Africa

The African Continental Free Trade Agreement (AfCFTA) came into force on January 1st. The agreement has been signed by 54 nations (with Eritrea the only non-signatory), but only 33 AU member states have actually ratified the agreement, and fewer still have introduced the customs procedures needed to facilitate efficient tariff-free trade within the bloc. It may take several  years for some countries to align national legislation with the new requirements. In the interim, the  AfCFTA Secretariat can expect a flurry of legal challenges from member states on behalf of their respective corporations. While not encouraged, these legal challenges may actually help to clarify details of the current framework and hasten implementation. 

While there’s  overwhelming acceptance that free trade boosts exports and increases revenues, many African countries have not yet embraced the corollary requirement for higher import volumes. The benefits of integration and rules-based trade governance in Africa will depend on how the new regime is implemented over time and how effectively the Regional Economic Communities (RECs) can contribute to this process. While the agreement does not represent a common market or customs union, the AfCFTA does represent a major step towards that direction and offers myriad opportunities for forward-thinking nations to enhance their competitiveness as destinations for foreign direct investments.

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About Africa Practice

Africa Practice is a strategic advisory firm, operating at the nexus of industry and government. Africa Practice supplies insights and advocacy solutions to corporations, investors, governments and foundations in Africa, enabling them to see more clearly, engage with confidence and unlock value to drive sustainable and equitable development.

 

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