06 January 2021, Gaborone, Botswana

Hopes are high and there is considerable optimism among the African business community, as the potential benefits to be derived from the single market agreement for goods and services as well as capital movement across Africa, whose Gross Domestic Product (GDP) is valued at US$3.4 trillion by The World Bank, could be tremendous. Finally, after months of delays caused by the COVID-19 pandemic, the African Continental Free Trade Area kicked off on the first of January 2021, but full implementation of the historic pact may take years. The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization. During the official virtual launch of the pact, Ghana president, Nana Akufo-Addo noted that the market is a clear indication that there is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant. He noted that COVID-19 has demonstrated that Africa is overly reliant on the export of primary commodities, overly reliant on global supply chains, adding that when the global supply chains are disrupted, it is mostly Africa who suffers. Trade under the AfCFTA was meant to be launched on July 1, 2020, but was pushed back after COVID-19 made in-person negotiations impossible. All members of the African Union except Eritrea has signed on to the AfCFTA framework agreement, and 34 have ratified it. According to the UN Economic Commission for Africa (ECA), the Eastern Africa region is anticipated to generate US$ 1.8 billion in welfare gains and benefit from over 2 million jobs from the successful implementation of AfCFTA. For Intra-African trade, 90 per cent of all goods became tariff free from January 1 for all the countries that have deposited their instruments of AfCFTA ratification with the chairperson of the African Union Commission (AUC). A total of 36 countries have already completed this procedure.  By giving a boost to intra-regional trade in manufacturing, AfCFTA is expected to increase employment opportunities, and help women get into the workforce. It can result in gradual altering of global supply chains, especially for products that require relatively lesser skills. In his New Year’s Eve speech, chairperson of the African Union who is also South African president Cyril Ramaphosa spoke about his enthusiasm for the new partnership,

“We are just a few hours away from the birth of the African Continental Free Trade Area, which will fundamentally change the economic fortunes of our continent. It is the start of a new era of trade between African countries…when [the continent] will realize its great potential of its abundant natural and human resources.”

During the launch of the Africa Futures Report, on the fifth of December 2020, H.E. Wamkele Mene, Secretary General of the AfCFTA Secretariat, said the Agreement “must create opportunities for women in trade; amongst others, by lowering the gender wage gap.” Young Africans,” he continued, “are at the cutting edge of technological innovation for digital trade and e-commerce.”

Headquartered in Accra, Ghana, the AfCFTA Secretariat will provide technical support to the overall implementation of the Agreement through strategic collaboration, stakeholder engagement and resource mobilization. The AfCFTA agreement, which was signed by 54 of the 55 African Union member nations, is the second largest free trade area by participating countries after the World Trade Organisation with 164 members. AfCFTA is an AU Agenda 2063 flagship initiative established to create an integrated continental market for goods and services and to support the movement of capital and natural persons. The AfCFTA is expected to enhance competitiveness, promote industrial development through diversification and regional value chain development, and foster sustainable socio-economic development and structural transformation. UNDP will continue to provide the space for these stories to thrive by going beyond the story and working with partners on the ground to ensure support for women and youth export-led enterprises. This market will be actualized through the progressive elimination of tariffs and removal of non-tariff barriers. The deal unites an estimated $3 trillion market, and could help to realise more than $84 billion in untapped intra-African exports, according to a new report by the African Export-Import Bank (Afreximbank).

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