The African Union has officially launched the operational phase of the African Continental Free Trade Area (AfCFTA), marking a major milestone in Africa’s economic integration. The AfCFTA agreement, adopted in March 2018 and enforced by May 2019, aims to boost intra-African trade and drive economic growth across the continent.
During a special summit, 27 countries that had ratified the agreement were recognized, while 28 others were acknowledged for signing but not yet ratifying. Eritrea remains the only African nation yet to sign. Ghana was also announced as the host of the AfCFTA Secretariat.
Key Elements of the AfCFTA Operational Phase
1. Rules of Origin – Defines the conditions under which goods and services qualify for duty-free trade within Africa.
2. Tariff Concessions – Calls for a 90% tariff reduction, with sensitive products granted a phased transition over a decade.
3. Non-Tariff Barrier Monitoring – Introduces an online system to track and eliminate trade barriers like poor infrastructure and customs inefficiencies.
4. Pan-African Payment System – Enables transactions in local currencies with final settlements in foreign exchange, ensuring smooth cross-border trade.
5. African Trade Observatory – A centralized trade information portal providing market insights, trade statistics, and details on exporters and importers.
The Significance of AfCFTA
As the largest free trade area since the World Trade Organization’s formation, AfCFTA covers a population expected to grow from 1.2 billion to 2.5 billion by 2050. The agreement aims to:
Increase intra-African trade, currently at 15-18%.
Promote regional value chains to enhance manufacturing and agro-processing.
Strengthen African businesses’ access to global markets.
Boost Africa’s economic and trade diplomacy.
Trading under the AfCFTA framework is set to begin soon, with the Secretariat in Ghana overseeing its implementation. Until it becomes fully operational, the African Union Commission will serve as the interim Secretariat.
