(VOVWORLD) - The African Continental Free Trade Area (AfCFTA) has been launched in Niger with the witness of 54 leaders of member countries. The agreement will improve the lives of 1.2 billion people in Africa.
After 17 years of tough negotiations, AfCFTA will open a market worth 2.5 trillion USD and improve the lives of Africans who have been living in poverty and conflicts. The African Union says a majority of African countries have agreed to share rules of origins and supervision, remove non-tariff barriers, and apply digital payment system and monitoring portal.
Ambitious expectations
AfCFTA was the focus of the 2063 Agenda adopted by the AU in May, 2013. The AU is the first regional organization to have created a half-century long plan.
The FTA will remove tariffs on 90% of goods and services and increase intra-African trade 60% in the next three years compared to the current 16%. AfCFTA is expected to fundamentally change the “game” in Africa which previously focused on increasing trade with Europe, America, and Asia will now strengthen trade within Africa. According to the AU, intra-African trade revenue is much lower than the current 19% in Latin America, 51% in Asia, 54% in North America, and 70% in Europe.
The FTA is expected to strengthen sustainable growth, create jobs, reduce poverty, attract foreign investment, promote industrial development, and enhance international integration.
Niger's President Mahamadou Issoufou hailed it as "the greatest historical event for the African continent since the creation of the Organization of African Unity in 1963," referring to the AU's predecessor. "An old dream is coming true," said AU commission chairman Moussa Faki, adding that AfCFTA would create "the greatest trading area in the world." United Nations Deputy Secretary General Amina Mohammed said the continent-wide trade agreement represents a region "on the move". She said the agreement is "integral" to " build bridges for peace" and it is now time to turn words into action.
Major difficulties
Though the FTA has been launched, the African Union says the agreement will only be fully activated on July 1st, 2020 to enable its members to prepare thoroughly for their effective participation. Free trade cannot be implemented overnight but will take at least few years or more. Less-developed countries need 10 years to remove tariffs and least-developed countries like Niger and Malawi need about 15 years to prepare.
The African Union also needs a large investment to develop and reform its technical infrastructure in order to realize the agreement. Free movement of people, goods and services within the continent is another issue the AU needs to address. Other challenges for the realization of AfCFTA are the region’s widespread conflicts and civil wars. Despite these difficulties, the launch of the free trade agreement reflects the continent’s giant leap toward prosperity.