African countries form the largest free trade zone in the world

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. / AFP PHOTO / STR (Photo credit should read STR/AFP/Getty Images)

On Sunday July 7, after years of negotiations, the African Union (AU) launched the operational phase of the African Continental Free Trade Area (AfCFTA).
The AfCFTA will establish a single continental market for goods and services, with free movement of businesspeople and investment, paving the way for faster establishment of a customs union.
According to the UN Economic Commission for Africa, once fully operational, it’s believed that the free trade accord will boost the level of intra-Africa trade by more than 52 percent by the year 2022.
The agreement will be crucial for Africa’s development. For years, Europe and now even China have been plundering Africa of her raw materials. Presently, more than 75% of Africa’s external exports are extractives, namely oil and minerals.
Increasingly, African nations hoping to secure sustainable economic growth are shifting away from the instability associated with extractive exports towards industrialized goods.
Overall intra-African trade is a miniscule 42%, but this figure is projected to increase under AfCFTA. This will provide more employment opportunities for the growing youth population.
The AU estimates that the AfCFTA could be the world’s largest free trade zone with over 1.2 billion people and a combined gross domestic product (GDP) of over 2 trillion dollars.
Presently, only a meager 15% of African exports go to other African countries, while 58% go to Asia and 67% to Europe. This is largely due to restrictions and tariffs imposed by former colonial masters, such as France. This makes it easier for African countries to export out of Africa than within Africa.
The United Nations pledged their full support to the AU.
Describing the game changing achievement, Ms. Amina Mohammed, the United Nations Deputy Secretary-General said: “The AfCFTA is “a tool to unleash African innovation, drive growth, transform African economies and contribute to a prosperous, stable and peaceful African continent, as foreseen in both Agenda 2063 and the 2030 Agenda for Sustainable Development.”
Mohammed affirmed that the UN would work with the AU to coordinate and leverage complementary funding sources from the African Development Bank’s (AfDB) Africa 50 Fund, to the AU’s Programme for Infrastructure Development in Africa (PIDA), and China’s Belt and Road Initiative.
The continental free trade area agreement also saw Nigeria and Benin’s presidents add to the signatories. This moved the number up to 54 out of 55 countries.
Eretria is yet to sign the agreement and has not given an official statement as to why.