Policymakers claim that the free movement of workers will be a key factor in the proper functioning of the free trade area, but not all African countries are committed to this concept. The pandemic is expected to result in production losses of up to $79 billion in Africa in 2020. The African Development Bank Group`s 2020 African Economic Outlook (AEO) Supplement estimates that Africa could suffer GDP losses of between $145.5 billion (baseline) and $189.7 billion (worst-case scenario) in 2020 compared to pre-COVID-19 GDP estimates. In addition, trade in medical products and foodstuffs has been disrupted. It is fully recognized across the continent that the AfCFTA represents a short-term opportunity for countries to “build back better” and cushion the impact of the pandemic. In the longer term, the pact will strengthen the continent`s resilience to future shocks. The official start of trade was officially endorsed at an extraordinary meeting in December 2020, during which AU Member States called on “women, youth, business, trade unions, civil society, cross-border traders, academia, the African diaspora and other stakeholders to join them as governments in this historic effort to create `the Africa we want` in line with Agenda 2063.” If you do not have the roads, if you do not have the right equipment for the customs authorities at the border to facilitate the fast and efficient transit of goods… If you don`t have the infrastructure, both hard and soft, it diminishes the meaning of this deal,” Mene told the Financial Times ahead of the launch. The new market, created under the African Continental Free Trade Area (AfCFTA) agreement, is estimated at 1.3 billion people in Africa, with a combined gross domestic product (GDP) of $3.4 trillion. This could lift up to 30 million Africans out of extreme poverty, according to the World Bank. Physical constraints on conducting business during global lockdowns have made negotiations and due diligence difficult for all negotiators, but virtual conference call services have done much to address logistical challenges and have given the parties the opportunity to continue negotiations effectively. Africa`s new virtual trade platform is a service that has been of great use in speeding up negotiations in vast regions and is home to many different cultures, languages and legal frameworks. Its effective use lays the foundation for more effective cross-border negotiations in many other Africa-wide and government-wide trade initiatives. The new year began with trade under the AFCFTA Continental Free Trade Area.

But what does the new trade zone mean for existing bureaucracy, poor infrastructure, tariffs and freedom of movement throughout the region? Paul Brenton is a Senior Economist in the Trade and Regional Integration Unit (ETIRI) of the World Bank. It focuses on analytical and operational work on trade and regional integration. The 12th Extraordinary Meeting of the African Union on the AfCFTA was convened to bring the new agreement into its operational phase, which took place in Niamey on 7 July 2019. [40] [41] In Colombia, for example, the Alliance worked with the National Institute for Food and Drug Surveillance and companies to implement a risk management system that can facilitate trade while protecting public health by reducing the average rate of physical food and beverage inspections by 30% and saving importers $8.8 million in the first 18 months of operation. US dollars. The agreement aims to create a single market for goods and services to deepen Africa`s economic integration. The trade zone could have a combined gross domestic product of about $3.4 trillion, but achieving its full potential depends on major policy reforms and trade facilitation measures in African signatories. The agreement was negotiated by the African Union (AU) and signed by 44 of its 55 member states in Kigali, Rwanda, on March 21, 2018. The only country that has not yet signed the agreement is Eritrea, whose economy is largely closed.

• The agreement must address the challenges of implementation in order to realize its many benefits. Even with better infrastructure under the AfCFTA and rail networks under construction between Kaduna and Lagos (Nigeria`s commercial hub where seaports for traded items from South and West Africa are located), intra- and international transport costs remain high in the short term. A recent article in the Nigerian newspaper The Punch notes that the price of shipping a container from the port of Apapa to Lagos to the mainland (distance of only 20 kilometers) is almost the same as shipping a container from Nigeria to China. This type of cost will increase with the implementation of the AfCFTA due to the increasing demand for transport and shipment of goods in countries. In other words, intraregional fluctuations in transport costs affect production costs and the prices of traded items, as well as trade flows between countries. Changes in the pattern of trade then lead to unequal distributional effects on consumption, real wages and prosperity between regions and countries, depending on changes in tariff rates on traded products. As of July 2019, 54 of the 55 African Union states had signed the agreement, with Eritrea being the only country not to sign it. Of these Member States, 27 have deposited their instruments of ratification. [43] [44] In addition to signing the creation of the AfCFTA and the Kigali Declaration of Support, 30 African states have signed the Protocol on the Free Movement of Persons, which aims to establish a visa-free zone in the AfCFTA countries. However, the main signatories to the AfCFTA, Nigeria and South Africa, have not signed the protocol and the political will to do so is lacking. This shows that African nations do not trade with each other because of a mismatch between what different African countries need and what is produced on the continent. This misalignment signals missed opportunities to reduce foreign imports from outside Africa and increase intra-continent trade flows.

For the AfCFTA to be fully successful, more countries need to diversify their commodity production to better meet the import needs of their continental neighbours. The report shows that trade in services is particularly promising, given that the services sector currently accounts for more than half of gross value added in Africa. .