President Buhari Signs Landmark AfCFTA Trade Pact [Read What it Means]

President Muhammadu Buhari has signed the Agreement Establishing the African Continental Free Trade Area ,AfCFTA, at the opening of the 12th Extraordinary Session of the Assembly of African Union Heads of State and Govt, in Niamey, Niger Republic, July 7, 2019.

“Today the 7th July, 2019, will be remembered as The DAY #Africa achieves another historic milestone of uniting Africa for collective Prosperity, Peace and Harmony. The operational phase of #AfCFTA will be officially launched today, by African Heads of State” the AU Twitter handle said.

The signing launches the operational phase of the long-sought-after agreement.

Chairperson of the AU Commission, Moussa Faki Mahamat, hailed the launch of the free trade pact as a “historic moment” in Africa’s history, especially toward the realisation of the 50-year African development Agenda 2063.

“The speedy entry into force of the AfCFTA has been a major pride to all of us,” Faki said. “Niamey marks the history of a new era in Africa’s integration.”

“More than just a free trade area, the AfCFTA is by excellence the instrument for industrialization and integration with an objective of the aspirations of the Agenda 2063,” the head of the 55-member pan-African bloc said.

The African free trade accord was launched on March 21 last year in Kigali, capital of Rwanda.

It came into force on May 30, after the deposit of the required minimum of 22 instruments of ratification by AU member states to the AU Commission.

Five more instruments of ratification have since been deposited, including Gabon and the Equatorial Guinea, which deposited theirs on Sunday, bringing the total number of countries that have deposited their AfCFTA ratification to the AU Commission to 27.

Momentous Moment

United Nations Deputy Secretary-General Amina Mohammed also stressed that the start of the operational phase of the continental free trade pact is “a momentous moment, urging the African countries to effectively harness the potential of the free trade pact.

The AfCFTA, added Nigeria, Africa’s most populous and largest economy, and Benin to its growing list of signatories, leaving Eritrea as the only member of the African Union that has not signed onto the historic accord.

Nigerian President Muhammadu Buhari and Benin’s President Patrice Talon signed the agreement, making the two countries as the 53rd and 54th signatories, respectively.

The AfCFTA, among its major aspirations, calls for a single continental market for goods and services, with free movement of business persons and investment, paving way faster establishment of a customs union.

Once fully operational, the free trade accord is projected to boost the level of intra-Africa trade by more than 52 percent by the year 2022, according to the UN Economic Commission for Africa.

According to the AU, the AfCFTA “has laid the foundation” for what could be the world’s largest free trade zone by the number of participating countries, covering more than 1.2 billion people with a combined gross domestic product of 2.5 trillion U.S. dollars.

Background

The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area by an indicative date of 2017. This deadline was, however, not met. The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven priority action clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration.

The AfCFTA will bring together all 55 member states of the African Union covering a market of more than 1.2 billion people, including a growing middle class, and a combined gross domestic product (GDP) of more than US$3.4 trillion. In terms of numbers of participating countries, the AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization. Estimates from the Economic Commission for Africa (UNECA) suggest that the AfCFTA has the potential both to boost intra-African trade by 52.3 percent by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.

The main objectives of the AfCFTA are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union. It will also expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation and instruments across the RECs and across Africa in general. The AfCFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources. 

African leaders held an Extraordinary Summit on the African Continental Free Trade Area (AfCFTA) from 17-21 March 2018 in Kigali, Rwanda, during which the Agreement establishing the AfCFTA was presented for signature, along with the Kigali Declaration and the Protocol to the Treaty Establishing the African Economic Community relating to the Free Movement of Persons, Right to Residence and Right to Establishment. In total, 44 out of the 55 AU member states signed the consolidated text of the AfCFTA Agreement, 47 signed the Kigali Declaration and 30 signed the Protocol on Free Movement.

As at end-March 2019, only three countries have yet to sign the consolidated text of the AfCFTA Agreement: Benin, Eritrea and Nigeria. The legally scrubbed documents were signed on 16 May 2018:

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