CAPE TOWN – The African Union has finally launched the operation phase of the African Continent Free Trade Area (AFCFTA).
The goal is to establish a single continent market for goods and services, allow the free movement of business travelers and investments and create a Continental customs union to streamline trade.
The agreement signed by over ten countries in the continent will create the world's largest free trade area once it's fully up and running and attract long -term investment.
Ratifying the agreement has been a major step, as it is essential for growth and job creation for Africa and it's 1.27 billion.
We presently have leaders of 54 countries putting their neck on the road for this agreement, it is a game-changer.
Arancha Gonzalez Laya, Executive Director of the International Trade Center (ITC), speaking at the World Economic Forum summit in Cape Town said there is more political energy than there has ever been on integration on implementing the agreement.
Intra-Africa trade has been worrying low, remarked leaders at the summit. It currently stands at 18%, compared to 50% in the United States and 60% in Asia.
While the potential is great, the challenge is that there are fragmentations, with economies at widely varying stages of development. While the reality is that there will most likely be winners and losers, the role of the African Union will be to see that countries can have shared prosperity on the continent despite the challenges.
Concerns were raised about monopolies, but there were also assurances that the agreement will have policy to punish those who engage in uncompetitive behavior.
There is an opportunity for countries and companies to help each other grow, as they have done in some other regions.
The consequences of trade liberalization have the potential to damage the poorest within countries, which is why it is so important to have support policies.
While infrastructure development in Africa has been progressing, there is still a long way to go in order to make trade easier between countries.
”We need one-stop border posts, common rules, and harmonious regulations to ensure that the flow of goods happens far more quickly and easily. Standardization of regulations is going to be important.’’ said Patrick Khulekani Dlamini, The Chief Executive Officer and Managing Director of the Development Bank of South Africa.
“We have got to a very aggressive program of trade facilitation so that we can minimize the number of documents that need to be signed for goods and services across borders, ” said Albert Mudenda Muchanga, commissioner for trade and industry at the African Union Commission.