The African Union (AU), at their annual meeting in March of this year (2018) signed a treaty to aid the free flow of trade within African countries. This initiative would further the goals and tenets of the AU with a view to becoming a more cohesive union by reducing intercountry barriers. The African Continental Free Trade Area Agreement (AfCFTA) was endorsed on March 21, 2018 by 44 African countries, save for 9 member countries, including Nigeria and South Africa.
The general objectives, taking note, and in the broader context of the treaty establishing the African Economic Community, are to commit countries to: remove import duty on 90% of all goods while the remaining 10% (relating to sensitive items) will be phased out later; agreements on trade in goods and services, investment as well as setting rules and procedures on dispute settlement. It also includes provisions to facilitate trade, reduce transaction costs, provide exceptions and safeguards for vulnerable groups and countries in challenging circumstances. Ultimately the movement of people and a common currency are expected to evolve in the free trade area.
Specifically, the AfCFTA seeks to:
- create a single market for goods, services, and movement of persons in order to deepen the economic integration of the African Continent and in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063;
- create a liberalized market for goods and services through successive rounds of negotiations, contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and Regional Economic Communities (RECs);
- lay the foundations for the establishment, at a later stage, of a Continental Customs Union;
- promote and attain sustainable and inclusive social and economic development and structural transformation of the State Parties;
- enhance the competitiveness of the economies of State Parties within the continent and at the global market;
- promote industrial development through diversification and regional value chain development, agricultural development and food security; and
- resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
The above objectives are laudable and if looked at, in conjunction with the objectives of the AU, will go a long way in liberalizing trade within Africa. However, thought has to be given as to what parameters need to be put in place in the Nigerian legal and business framework to enable Nigeria benefit positively from the treaty.