In a bold move, 54 African countries have signed a free trade deal aimed to create the open movement of goods around the continent.
Every African country except Eritrea has joined the African Continental Free Trade Area or AfCFTA. In what will be the world’s largest free trade area. It’s expected this will boost intra-Africa trade by some 60% by 2022.
Currently most African countries do more trade with countries outside the continent than with neighbouring African countries. At present 65% of Africa’s trade is with Europe and 37% with North America compared with just 15% taking place within the continent.
The new free trade area will create a single African market with the free movement of goods, services, finances and people around the continent. It will incorporate more than 1.2 billion consumers and open up markets with a combined GDP of $3 trillion.
It’s estimated that it will boost Africa’s per capita GDP from around $2,000 currently to £3,250 by 2030.
Economists say there is still work to do before the free trade area becomes operational in July next year but there’s optimism that this new economic area will not only boost Africa’s collective GDP but will make the continent more attractive to foreign investors from Europe, Asia, North America and the crucial neighbouring Middle Eastern market.
As a result Africa is expected to increase the standard of locally made goods and have greater access to new technologies to boost mass production and develop a more skilled labour force which will be able to move freely to where the jobs are being created.
It is also expected to encourage African businesses to make a shift from exporting raw materials to developing more manufacturing centres as they reap the benefits of tariff liberalisation and free movement of people. The aim is for this new free trade block to grow into the largest economy in the world.
By 2050 Africa will have a larger working-age population than both China and India. It’s hoped that this new free trade area will facilitate more opportunities for this future workforce.
At a time when the UK seems to be turning its back on the European Union’s single market and when European growth is sluggish, it’s ironic that Africa is embracing this new deal and investing new political and economic energy in taking advantage of border-free trade.
In many ways it’s a new coming of age for Africa. After all, many of its borders were arbitrarily imposed by the European colonists in the nineteenth century. The breaking down of these borders is perhaps a harbinger of a new Africa which transcends those often artificial barriers and unleashes the new entrepreneurial spirit of Africa’s youth that we see blossoming across the continent.
Many eyes remain fixed on Brexit and how the EU will look after the UK’s retreat from Europe. Perhaps we should start looking south to the birth of a new economic powerhouse.
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