The African Union (AU) head reported that around 44 African countries have got together to sign an agreement that establishes a free trade zone, which was important for the development of their economies.
The formation of a free trade sector is being touted as one of the world’s biggest because of the number of the participating countries.It took almost a couple of years of discussions and is AU’s flagship project, which aims at bringing better African integration.
There was another agreement between 27 countries that allowed their people to move freely across borders, hence making it easier for the citizens from other signatory countries to come and live in their nations for up to a maximum of 90 days.
The deal is currently pending and has to be reviewed at a national level, and in most likelihood, it would be enforced in 180 days.However, having said that, Nigeria and South Africa, which are Africa’s largest economies, are not a party to this agreement.
Muhammadu Buhari, the President of Nigeria said that he was taking advice back at home as there were some questions and objections raised from its unions and business leaders.
On the other hand, South Africa’s President, Cyril Ramaphosawelcomed the agreement and said that it would boost the African countries and firms to a much higher altitude of growth and make company formation in Africa more attractive. But he would only decide to sign the agreement when it is reviewed by his own country’s parliament.
Albert Muchanga, the AU Commissioner for Trade and Industry told that some countries weren’t sure of this decision and did not finalize their consultations. However, another upcoming summit, which is lined up in Mauritania in the month of July, where the countries that had some reservations are also expected to sign the agreement. But there are still some financial and economic powerhouses like Morocco, Egypt, Kenya, Ethiopia, and Algeria, who signed the deal.
If all the 55 AU nations finally decide to sign up the agreement, it will eventually create a community having a cumulative GDP of $2.5 trillion (which is equivalent to 2 trillion euros), covering a market of approximately1.2 billion people.
As of now, the African countries are doing a meager amount or 16 percent of their trade with each other, which is a very small percentage of intra-regional business when compared to continents such as Asia, Latin America, Europe and North America.
Most of the businesses pay the much higher price(the average being 6.1 percent), while exporting goods within Africa as compared to exporting out of the continent. So if customs and duties are removed by 2022, the business within intra-African sector will surely dart up by a significant 60 percent, said Muchangato AFP before the summit.
Those who are advocating and supporting this deal say that AU economies aren’t that strong on their own to sustain economic diversification and further development of their industries and they will surely gain if they have one single platform to collaborate and work out the business deals with more developed nations.
Faki mentioned in a speech just before the signing ceremony that the CFTA is planning to work on Africa so that it becomes one of the biggest economies in the world. They also plan to increase its knack to network on equal terms and conditions with the other economic giants and blocs.
Faki also said that Africans have experienced many such announcements remain ineffectual and not having any practical value when it came to execution; so now they have qualms towards the intensity of this commitment. Therefore, he requested for a deal that must surprise all who are outside Africa and are of the thinking that this decision will not materialise.