The African Continental Free Trade Area (AFTA) was officially launched on January 1, 2021, marking a milestone for African countries towards a unified market. Experts said the launch of the African FREE Trade Zone will help African economies overcome the epidemic and turn the crisis into an opportunity, and pave the way for future economic revitalization.
The official launch of the African Free Trade Area is expected to enhance Africa’s resilience in development
On January 1, 2021, the launch ceremony of the Free Trade Zone on the African Continent was held online, marking the official launch of the African Free Trade Zone. Analysts believe that despite many challenges, the fta has highlighted the determination of African countries to promote economic transformation and is expected to enhance The resilience of Africa’s development.
Speaking at the launch ceremony, UN Deputy Secretary-General Amina Mohammed said the free Trade area in Africa has created an opportunity for Africa to return to the track of achieving the Sustainable Development Goals.
Starting from 1 January 2021, members of the African Free Trade Area (FTZ) will phase out tariffs on goods other than exceptional products in accordance with product categories and their respective circumstances, according to relevant agreements. The official website of the FREE Trade Zone and its supporting data monitoring platform have been launched, and the Secretariat of the Free Trade Zone for Africa (FTZ) in Accra, The capital of Ghana, has also been put into operation.
The African Free Trade Area was officially established on July 7, 2019, but due to COVID-19 and other reasons, the Free trade Agreement on the African continent was not formally implemented as planned on July 1, 2020. Up to now, 54 of the 55 members of the African Union have signed the African Continental Free Trade Framework Agreement (FTA), and 34 have completed their respective legal procedures and become full members of the FTA.
Analysts said that after the launch of African FREE Trade Zone, the subsequent construction will face many challenges, such as the large gap in economic development level, lack of professional talents, inadequate infrastructure, as well as the impact of the epidemic, political instability and security issues. Due to the co-existence of African FREE trade zones and African sub-regional organizations, the degree of integration is not synchronized, and the effectiveness of free trade agreements may also be weakened.
But experts point out that in the long run, the FTZ is expected to accelerate intra-regional trade, create jobs and make the continent more attractive to foreign investment. According to a Report released by the World Bank in July 2020, If fully implemented, Africa’s FREE trade area could reap real benefits of nearly $450 billion by 2035. By 2035, Africa’s total exports will rise by almost 29 per cent, with intra-continent exports rising by more than 81 per cent and exports to non-African countries by 19 per cent.
Amina Mohamed said the FTAA is expected to increase trade in industrial goods between African countries by 25 to 30 percent, boost Africa’s industrialization process and help the continent’s economy achieve sustainable recovery while responding to the epidemic.
The launch of the African Free Trade Area once again demonstrates the determination of the African continent to promote economic transformation and take control of its own destiny. President Cyril Ramaphosa of South Africa, rotating chair of the African Union, said publicly recently that the launch of the African Free Trade Area (FTAA) is one of the most important milestones in the process of African integration, and it is also Africa’s loudest statement to the world that “Africa takes its destiny in its own hands”.
Secretary General Of the African Free Trade Area Secretariat, Mene, pointed out that Africa’s foreign trade is excessively dependent on the export of primary commodities, and Africa must actively promote the construction of the African Free Trade Area to realize the fundamental structural transformation of the African economy.
The African Free Trade Area may also bring new opportunities for China-Africa economic and trade cooperation. Rwandan economic analyst Teddy Kaberuka believes the African free Trade zone will help Rwanda expand its market and attract more Chinese investors into local manufacturing.
Bu Yu, a consultant to the African Development Bank, told Xinhua News Agency that with the launch of the Free Trade Area in Africa, China can promote trade through investment, promote the development of Africa’s agricultural and mineral processing, household appliances, textiles, medicine and other industries, and help build “made in Africa”.
In May 2019, the African Continent’s Free Trade Area agreement officially came into force. Due to COVID-19 and other reasons, the agreement has been postponed from July 1, 2020 to January 1, 2021, when the first transactions under the new mechanism will be completed. Fifty-four of the 55 members of the African Union have signed the fta. When the free Trade zone is officially launched, 39 African countries are expected to formally ratify the legal instruments of the African Free Trade Agreement. The African free Trade Zone will be the world’s largest, covering 54 countries and 1.2 billion people.
Nadia Hashem, a United Nations trade policy expert on Africa, said its launch would help African economies weather the epidemic and turn the tide, paving the way for future economic recovery. “The main strength of the agreement is the elimination of tariffs on a wide range of goods. And that will eventually lead to the free movement of people, so I think people will have a wider market to do business in, which will attract better investment. By entering a wider market, their investments become more valuable. And that will create jobs.”
According to the African Economic Development Report 2019 released by the United Nations Conference on Trade and Development (UNCTAD), trade in goods between African countries accounted for only 15.2 percent of the continent’s total trade in goods between 2015 and 2017, compared with 67.1 percent in Europe, 61.1 percent in Asia and 47.4 percent in the Americas.
Experts said Africa’s free trade zone offers an important opportunity for countries to boost growth, reduce poverty and expand economic inclusiveness, which could mitigate the impact of the epidemic on Africa. Nadia Hassom, a UN trade policy expert on Africa, said: “We see the implementation of the CONTINENTAL FREE trade Agreement as a way for us to recover from this crisis and emerge stronger. Our model predicts that depending on the level of implementation of the FTA, the continent’s GROSS domestic product is expected to increase by us $28 billion to US $44 billion by 2040.”
The current AU chair, South African President Cyma Ramaphosa, said that in the context of global trade development, especially when the multilateral trading system is under threat, the importance of free trade agreements on the African continent is obvious and the free trade area will certainly improve Africa’s prospects as an investment destination. “If the African Free Trade Agreement is to succeed, we must overcome the political and socio-economic challenges facing the continent. We must tackle poverty, inequality and underdevelopment. We must reaffirm our collective commitment to the aspirations of Agenda 2063 without wavering in our determination to achieve the Sustainable Development Goals by the end of the decade. There can be no progress without economic development, and the economic integration of Africa through the African Free Trade Agreement must now be our most important collective task.”