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Understanding the African Continental Free Trade Area Agreement

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In 2012, the African Heads of State and Governments resolved to establish AfCFTA treaty to create a single continental market for goods and services in member nations of the African Union, with free movement of business persons and investments using a single currency.

Consultations and negotiations for establishing the treaty commenced in June 2015 during the 26th Ordinary Session of the AU Assembly Heads of State and Government in Johannesburg, South Africa.

The year 2017 was adopted as the deadline the treaty would become operational. But, consensus was not reached among many member nations who requested for more time to continue consultations on the potential impacts on their economies.

The scope of the treaty covered agreements on trade in goods, services, investment, and rules and procedures on dispute settlement, including a range of provisions to facilitate trade, reduce transaction costs, provide exceptions, flexibilities and safeguards for vulnerable groups and countries in challenging circumstances.

But, after several years, the draft agreement was finally signed on March 21, 2018 during the 18th Extraordinary Session of the Assembly of AU Heads of State and Governments in Kigali, Rwanda.

About 44 of the 55 African countries signed the treaty. The signatories included host Rwanda,

Niger, Angola, Central African Republic., Chad, Comoros, Congo, Djibouti, The Gambia, Gabon, Ghana, Kenya, Mauritania, Mozambique, Cote D’Ivoire, Seychelles, Algeria and Equatorial Guinea.

Others include Morocco, Swaziland, Benin, Burkina Faso, Cameroon, Cape Verde, Democratic Republic of Congo, Guinea, Liberia, Libya, Madagascar, Malawi, Mali, Mauritius, South Sudan, Uganda, Egypt, Ethiopia, Sao Tome and Principle, Togo and Tunisia and others.

Nine others that did not sign the agreement included Nigeria, South Africa, Zambia, Tanzania, Burundi, Eritrea, Botswana, Lesotho and Namibia.

Nigeria said it was delaying its signature to the agreement to widen and deepen domestic consultations, to ensure all concerns were addressed, as it would not sign any agreement that would not fairly and equitably represent the interest of Nigeria and indeed, her African brothers and sisters.

The treaty aims at taking advantage of 1.2 billion population of the continent with a combined Gross Domestic Product of more than $2 trillion to create a single continental market for goods and services.

Some argue the treaty would impact on government revenue and social welfare, as elimination of all tariffs among African countries would erode the trading states’ treasury by up to $4.1billion annually and deepen poverty, with millions of Africans potentially exposed to starvation and death.

Others, particularly among the poorer economies, are afraid the benefits in the free trade area may not be equitably distributed among economies.

The International Monetary Fund says Nigeria is the largest economy in Africa with GDP of $405 billion, followed by Egypt ($332 billion) and South Africa ($295 billion). Nigeria, with a population of about 180 million is also Africa’s largest market.

The Nigeria Labour Congress kicked against signing the treaty, warning that doing so was “extremely dangerous” as it would open the country’s seaports, airports and other businesses to unbridled foreign interference and domination.

The Manufacturers’ Association of Nigeria also rejected government’s move to sign the treaty until proper consultations and inputs of all interest groups have been received on issues concerning market access and enforcement of rules of origin were addressed.

But, a former president, Olusegun Obasanjo ,has taken an opposing position as he expressed disappointment that Nigeria was not among the 44 signatories to the treaty in view of its pivotal role in promoting the vision.


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