Forty-Four African leaders, including Ghana’s President, Nana Akufo-Addo, on 21 st March 2018, have agreed on forming a US$3 trillion continental free trade zone.
The move is geared toward increasing intra-regional trade which sits at paltry 15 percent of Africa’s total commerce.
The draft agreement commits countries to removing tariffs on 90 percent of goods, with 10 percent of “sensitive items” to be phased in later.
The agreement was signed at a summit in the Rwandan capital, Kigali.
It is hoped the deal will come into force within six months and increase prosperity for 1.2 billion Africans. The African Continental Free Trade Area (CFTA) would remove barriers to trade, like tariffs and import quotas, allowing the free flow of goods and services between its members.
African Union Commission Head, Moussa Faki Mahamat called it a “glorious challenge… which calls for the courage to believe, the courage to dare… the courage to achieve”.
Trade between African countries is relatively low. It accounts for only 10% of all commerce on the continent — compared with 25% in south-east Asia — according to news agency Reuters.
Even though the Continental Free Trade Agreement is expected to provide the aforementioned benefits, the two biggest economies on the continent, Nigeria and South Africa did not sign the agreement.
It is unclear why Nigeria stayed on the sidelines but the President of South Africa, Cyril Ramaphosa, explained that his country will be ready to sign once the necessary legal and other instruments associated with it are processed and ratified by South African stakeholders and parliament.
Other countries also staying out of the bloc are Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Seirra Leone, and Guinea Bissau.