54 African countries will begin trading under the Africa Continental Free Trade Area in July 2020.
This comes after Africa’s superpower Nigeria signed the agreement, leaving Eritrea out as the only African state missing to join the largest African trading bloc.
While attending the 12th African Union Summit, Rwanda President Paul Kagame lauded Nigeria for signing the trade agreement saying his country supports the recommendations that Nigeria and other states made.
“I agree with the proposal of the executive council designating Ghana as our choice to host the AfCTA Secretariat. Our task is now to finalize the remaining negotiations and operational instruments in a timely manner,” he said.
The long-awaited agreement comes four years later where the African leaders struggled to come into an agreement, which hopes to usher in a new development in Africa.
The African continental free trade area main purpose is to help boost trade between African countries.
One of the first steps under the agreement is to cut tariffs for goods from different countries, however, there is no clear arrangement on when exactly the change is to be effected.
The African Union also hopes that the Africa Continental Free Trade Area will make the world’s largest free trade area.
This will lead to a 60 per cent boost in the intra-African trade by 2020.
However, experts have shared some hindrances such as poor roads and railway lines, violence-hit areas, strict border controls and rampant corruption that will be threatening to the free trade zones.
According to the International Monetary Fund, the reduction of tariffs alone is not enough.
“AU member countries agreed to eliminate tariffs on most goods, which would boost regional trade by 15-25% in the medium term. It could be doubled in the long term if other issues were dealt with,” it said in a report in May.
A free trade agreement is a program that focuses on cutting trade tariffs between member countries.
A tariff is described as a form of tax placed on goods coming into the country.
The best free trade agreement eliminates all border taxes and trade barriers on goods and also help make a country’s exports cheaper and give easier entry to other markets
