Establishment of CFTA to double trade in Africa, support 1 billion business owners

The creation of a Continental Free Trade Area (CFTA) could more than double the share of Africa’s trade by the year 2022 if only complemented by trade facilitation measures, the African Union Commission (AUC) has said.

The Commission says the CFTA would facilitate trade liberalization thus lowering tariff barriers for exchanging goods and services within the continent. This, said the regulator, will only be possible so long as it is accompanied by sufficient attention to the linkages between the forthcoming common markets and its relationship to fundamental investment sectors of the economy including finance, agriculture, employment, gender equity among others.

“The CFTA has the potential to support Africa’s economic transformation by enhancing competitiveness and productivity of African goods and services, circulating what African economies are producing to neighbouring markets and beyond,” explained the Commission in a recent statement. “A CFTA consisting of opening markets of trade liberalization on its own will not lead to structural transformation of African economies. Trade does not drive manufacturing by default; facilitating the exchange of goods without supporting the production of those goods will not contribute to meaningful development of African economies,” the AUC added.

The Commission suggests that the CFTA must encompass an agenda beyond tariff liberalization, including interventionist industrial and agricultural policy. It must support domestic productive capacity and agrarian transformation, develop manufacturing and agro-processing within domestic economies rather than continuing the export of raw materials and products.

In 2012, the African Union (AU) agreed to establish the Continental Free Trade Agreement (CFTA), a key African initiative aiming to urgently take forward the agenda for integration and development that has characterized continental aspirations since the formation of the Organisation of African Unity in 1963.

Intended to be finalized in 2017, the CFTA represents a pivotal opportunity to redress the vulnerabilities of Africa’s economies within the global economic order.

If successful, over one billion business owners across the continent who have a combined GDP of over $3 trillion (Sh303.5 trillion) would benefit either directly or indirectly from the CFTA.

 

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