The African Continental Free Trade Area (AfCFTA) came into effect on 30th May 2019. The agreement aims to establish a single market for goods and services and to allow for the free movement of products, labour, and investment within the African continent. 52 nations out of the 55 on the continent have signed the agreement but only 22 have given their formal consent to the Free trade Area.
The agreement for a single market is expected to boost Intra-African trade which stands at only 20 per cent behind regional blocs like European Union at 68 per cent, North America Free Trade Area at 50 per cent, and Association of Southeast Asian Nations at 59 per cent.
AfCFTA is highly dependent on private businesses and traders for it to succeed. African Businesses which mainly focus on European and Asian markets will have to shift their focus and create new trade links within the continent. A report by the Economic Commission for Africa notes, “Businesses need to be fully sensitized on the potential of AfCFTA. On this basis, they can then establish new trade linkages or push their governments to negotiate for these opportunities.”
The private sector also needs to partner with the government in creating the necessary infrastructure like road networks, railway links, and electricity lines needed for the intra-African trade. Businesses can assist by providing trade finance, information, and logistics services.
Lastly, businesses can contribute to the success of the African Continental Free Trade Area by being involved in the creation of rules and guidelines that will be used under the single market.
The single market agreement is expected to create jobs for the rapidly growing African population and boost economic expansion in the continent.
