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Africa’s Sh300 trillion free trade bloc unveiled

James Momanyi @jamomanyi

It was mission finally accomplished after representatives of 44 of the 55 African Union (AU) member states yesterday signed the long-awaited African Continental Free Trade Area (AfCFTA) treaty in Kigali, Rwanda.

President Uhuru Kenyatta was among 27 leaders who attended the AU Summit and ratified the AfCFTA agreements that will spring open the continent’s borders and bring 1.2 billion people into one basket. All the East African countries (except Burundi which did not attend the Summit) signed all the three protocols, which open up an almost $3 trillion (Sh300 million African free trade area.

The representatives of the 44 AU member states signed the agreement establishing the African Continental Free Trade Area, the Protocol to the Treaty establishing the African Economic Community relating to free movement of persons, right of residence and right of establishment and the Kigali Declaration for the launch of the African Continental Free Trade Area.

Only 22 member countries were required to sign the agreements to make the AfCFTA treaty operational. Moussa Faki Mahamat, the AU Commission Chair, said the aim was to have AfCFTA come into force by the end of this year.

“Our peoples, our business community and our youth in particular cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic takeoff and perpetuate misery, even though Africa is abundantly endowed with wealth,” Mahamat told Aljazeera.

The treaty commits countries to removing tariffs on 90 per cent of goods, with 10 per cent of “sensitive items” to be phased in later. It will also liberalise trade in services and might in the future include free movement of people and a single currency.

The signatory States are also expected to progressively liberalise trade in services, cooperate on all trade related areas and on investment, intellectual property rights and competition policy.

They will also commit themselves to cooperate on customs matters and the implementation of all trade facilitation measures. Additionally, the countries will establish a mechanism for the settlement of disputes concerning rights and obligations.

According to a statement from the ministry of Trade, the pact will create a massively liberalised market, and enhance competitiveness at the industry and enterprise level, enhance value addition of products and exploit economies of scale and optimum utilization of resource.

Similar sentiments were expressed by Mentoria Consulting Managing Director Ken Gichinga who said the pact will remove trade barriers that have hindred free trade in the continent. “However, while this pact could possibly target removing tariff barriers, the real test will be in its ability to address non-tariff barriers which in my opinion could be more challenging to remove,” he told People Daily.

“In the long run, the continental free-trade area has tremendous potential benefit to all the member countries in boosting their trade and transforming their economies,” Edward Brown, director at the African Centre for Economic Transformation, told Al Jazeera.

“You’re talking about 1.2 billion [people] with a combined GDP of $2.2 trillion, so it’s a huge market,” he added, referring to the AU member states. Additional reporting by PSCU.

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