Families all have unwritten rules that allow for a harmonious home environment where everyone can work together. When you go out into the world of work, those rules are written down; it’s again crucial to a harmonious working environment. When it comes to countries, interactions are governed by international relations best practices.
But countries, like family members and co-workers, don’t always play nice. So, you need things like trade agreements to help smaller economies get by and bigger economies flourish. Wouldn’t it be cool if African countries all worked together for the betterment of the continent and her people?
Well, wonder no more about that… the African Continental Free Trade Area agreement was recently officially launched at the African Union summit on the go in Niger. This was an agreement that had been ratified back in April, but was officially launched at Africa’s gathering of nations in the country’s capital, Niamey.
The agreement will cover a market of 1.2 billion people and an estimated gross domestic product (GDP) of US$2.5 trillion, across all 55 member States of the African Union.
The African Development Bank has been central in shaping the Continental Free Trade Area agreement, setting its strategy and format and approving a US$4.8 million grant to the AU to set up a secretariat and to accelerate its roll out.
Nigeria - Africa’s biggest economy - made history at the summit by becoming the 54th African country to sign up.
Niger’s president, Mahamadou Issoufou said the continent had waited too long to get this agreement signed, sealed and delivered, and was proud to have the auspicious occasion take place in his country.
AU President Abdel Fattah al-Sissi and AU Chairperson Moussa Faki Mahamat both stressed the need to celebrate the strides the continent has made.
And right they are. This is the world’s largest free trade area since the formation of the World Trade Organisation.
But, what does it mean?
Well, for one, it makes doing business in Africa with other Africans a helluva lot easier. It would ease the movement of business people and goods and services within the trade area, giving African businesses a much larger marketplace.
For individual manufacturing economies, for example, it would be easier to export their goods elsewhere in Africa, rather than having their goods shipped - at greater cost and with higher duties - elsewhere in the world.
According to African Development Bank data released in June 2018, Central Africa’s real income could increase by as much as 7% in the 2019 African Economic Outlook. East Africa would see an increase of around 4.2%.
Look, unemployment and poverty are massive challenges in Africa, we’re not going to deny that. But this agreement would assist us all in helping to stimulate economic growth. Africa needed to grow between 4% and 6% to turn the tide, the African Development Bank said in June, and the Outlook I mentioned predicts Africa can add 4.5% to its overall GDP with the adoption, and actioning, of the agreement.
In simpler terms, you can think of the agreement as allowing your corner spaza being able to now go global. It gives entrepreneurs an in to a much bigger market, so they don’t feel the need to have to cut it overseas… if their goods and services aren’t a good fit for the market in their country, it’s now much easier for them to go to a neighbouring country, or another country in their region, or any other country in Africa, to do business.
It’s Africa taking control of Africa’s wealth - be it tangible consumables and goods, or skills and services.
In supporting your family and friends within any given community grouping or structure, you’ll find businesses prosper. We help each other out. In so doing, we lift one another up, out of the mire of poverty and exclusion, by creating an inclusionary environment.
Now think of that on a continental scale. It’s huge. We can only hope the red tape that is so often inextricably linked with doing business in Africa will now be cut, levelling the playing fields for all to have access to all markets on the continent.
All of this just leads to a more unified Africa, an Africa that is stronger, wealthier, and healthier, together.
Yes, there will be squabbles and teething problems, but hey, that’s what families are for, right? We’ve never been the kind of people to shy away from a challenge.
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