African leaders launch operational phase of AfCFTA

A historic moment unfolded as Nigeria and Benin signed the agreement establishing the African Continental Free Trade Area (AfCFTA) on Sunday. This marked the operational phase of the free trade area, expected to create a massive $3.4 trillion economic bloc for the continent. The importance of this launch was emphasized by Albert Muchanga, the Commissioner for Trade and Industry at the African Union, as he highlighted the significance of achieving a milestone in the signatures and negotiations. The focus now shifts towards delivering to the expectations of Africa, with a strong emphasis on implementing operational instruments to kickstart trading on July 1, 2020. Several key instruments were launched during the operational phase, including those addressing non-tariff barriers, rules of origin, trade concessions, payments and settlements, and the African trade observatory. The decision by heads of state to commence trading on July 1, 2020, was strategic, providing member states and the private sector ample time to prepare for the integrated market. Member states are urged to focus on enhancing their trade documents, security features, and national flags, while collaborations with regional economic communities are set to facilitate trade across the continent. Similarly, the private sector is encouraged to ramp up investments in production, logistics, and warehousing to capitalize on the opportunities presented by the AfCFTA. Nigeria and Benin's agreement signing is a significant step towards the unified market vision, with only one more country needed to achieve full participation from all 55 African Union member states. Moreover, the statement by Eritrea indicates their intent to join, along with impending ratifications from Morocco, signifying progress towards a unified African market. In terms of operational instruments, Muchanga clarified that while they are a work in progress, significant strides have been made towards finalizing the instruments before the trading commencement date. The digital payment system is expected to streamline transactions, reduce costs, and enhance tracking and monitoring capabilities, ultimately boosting intra-African trade. Rules of origin, currently 88% completed, are crucial in preventing Africa from becoming a dumping ground, ensuring products are produced and sold within the continent. The African trade observatory is set to provide vital information on product availability, prices, trade statistics, and import-export regulations, all aimed at improving transparency and reducing fraud in transactions. Lack of information is highlighted as a major barrier to intra-African trade, with the observatory poised to bridge this gap and foster a thriving trade ecosystem across the continent.