AfCTA will boost African economics – analysts
Sinikiwe Marodza
Harare – Regional and continental economic analysts have applauded the African Union member states’ recent move to finally ratify and allow the African Continental Free Trade Agreement (AfCFTA).
The much awaited African continental free trade agreement that came into being on May 30, after it was ratified by 22 member countries, dates back to March 2018 when 52 African Union member states signed an agreement meant to create a tariff-free continent that can grow local businesses, boost intra-African trade, rev up industrialisation as well as create jobs on the continent.
The agreement creates a single continental market for goods and services as well as a customs union with free movement of capital and business travelers and AfCFTA member states are committed to removing tariffs on at least 90% of the goods they produce.
The AfCTA agreement constitutes more than 44 African states which makes it the world’s largest since it covers more than 1.2 billion people with a combined GDP of $2.5 trillion, according to the UN Economic Commission for Africa (ECA).
Economists from the region, and Africa as a whole, believe that tariff-free access to a huge and unified market will encourage manufacturers and service providers to leverage economies of scale; and that an increase in demand will instigate an increase in production, which in turn will lower unit costs, and Consumers will pay less for products and services as businesses expand operations and hire additional employees.
Professor Albert Makochekano, an economic analyst from Zimbabwe, indicated that the free trade area will definitely enlarge markets and it will also give African countries a chance to increase production.
“Let me give you a good example. You walk into a shop, let’s say in Sierra Leone or Kenya and you find their shelves full of imported goods, including toothpicks from China, toilet paper and milk from Holland, sugar from France, chocolates from Switzerland and matchboxes from Sweden.
“Yet many of these products are produced much closer — in Ghana, Morocco, Nigeria, South Africa, and other African countries with an industrial base.
“So why do retailers source them halfway around the world? The answer: a patchwork of trade regulations and tariffs that make intra-African commerce costly, time wasting and cumbersome.
“So the introduction of African free trade area is definitely going to easy trade regulations and traffics hence creating better African economies by promoting sister nations,” he said.
Secretary-general of the United Nations Conference on Trade and Development, who is also Kenya’s former Minister of Trade and Industry, Mukhisa Kituyi, indicated that the AfCFTA will benefit African economies in a much greater way.
“Through the AfCFTA, we look to gain more industrial and value-added jobs in Africa because of intra-African trade,” Kituyi said.
Zimbabwe’s Foreign Affairs and International Trade Minister, Sibusiso Moyo, also indicated that the AfCFTA is a good move that will take Zimbabwe a long way in terms of boosting and reviving the country’s industrial sector that has recorded a decline during the past years.
“Zimbabwe looks forward to the AfCFTA, we are seeing that the doors are opening up for our products and we should look at it in a positive manner, looking at it in the sense that African goods are going to come into Zimbabwe and Zimbabwean goods are also going into Africa.
“We are looking at making sure that African countries should choose to buy our stuff,” Moyo said.
Africa is a continent full of indigenous people, especially women and youths and another economist and Zimbabwe businessman Pius Museza indicated that the introduction of a free trade area will benefit such people.
“Well, I believe that Africa being Africa, a continent that is full of informal traders, especially women who actually account for 70% of informal cross-border trading, will benefit from simplified trading regimes and reduced import duties, which will provide much-needed help to small-scale traders.
“The implementation of AfCFTA comes with a lot of benefits, a free trade area could inch Africa toward its age-long economic integration ambition, possibly leading to the establishment of pan-African institutions such as the African Economic Community, African Monetary Union, African Customs Union and so on,” Museza said.
However, despite the coming into force of the AFCTA, there remains several outstanding issues that require resolution, including arbitration measures, certifying origins of goods, tackling corruption, and improving infrastructure.
