The African Union has announced that the first commercial deal of the world’s biggest free-trade pact, the African Continental Free Trade Area (AFCFTA), will be taking off on January 1, 2021, as virtual meetings will be used to complete the outstanding discussions and negotiations.
While the African Continental Free Trade Area entered into force legally last year, transactions that were due to start on July 1 were delayed as the coronavirus pandemic set back negotiations on the protocol for trade in goods, including tariff concessions.
The outstanding negotiations will be finalized through a new African Virtual Trade-Diplomacy Platform that is being developed as a public-private partnership between the African Union Commission and more than 20 African multinational companies, the African Union which leads the trade deal said in a statement published on its website.
Upon implementation, the continental free-trade zone would be the largest new economic integration, since the creation of the World Trade Organization in 1994. Furthermore, the trade deal has the potential to bring together 1.3 billion people in a $3.4 trillion economic partnership.
However, the change of date for full operations might mean that the project will experience a significant setback in boosting intra-African trade by 52 percent in 2022 (according to a forecast by the United Nations Economic Commission for Africa).
The AU maintains that the AfCFTA will offer Africa an opportunity to reconfigure its supply chains, reduce reliance on others, and speed up the establishment of regional value chains which will boost intra-Africa trade.
A report by the World Bank said the successful implementation of AfCFTA would mitigate negative COVID-19 effects on economic growth by boosting regional trade and reducing trade costs.
The free trade area is expected to be fully operational by 2030, making it the world’s largest free-trade zone by area. It has 55 member countries signed on to join, including Nigeria, 28 of which have ratified the agreement.
In terms of internal trade, Africa is behind other parts of the world, with intra-continental trade accounting for just 15 percent of the total compared to what is being done in Asia, which is 58 percent, and in Europe, more than 70 percent.