Nigeria, Benin sign African Continental Free Trade Agreement as AfCFTA is operationalised
As the official launch of the largest trade zone in the world is launched in Niamey, Niger, today, July 7, 2019, one African country remains the only one out of the 55 States to sign-up to the African Continental Free Trade Agreement that will lead to the African Continental Free Trade Area (AfCFTA). The AfCFTA with a market of over 1.2 billion is projected to create an economy of $2.3 trillion if the continent increases trade by at least 50 per cent.
Nigeria, the largest economy on the continent and its neighbour, Benin signed the Agreement today, bringing the number of States to 54, leaving Eritrea as the only country yet to sign.
After signing the Agreement, countries are required to deposit their instrument of ratification with the African Union Commission Secretariat.
The Agreement formally came into force on May 30, 2019. The launch today will start the process of operationalizing the AfCFTA.
Currently, intra-African trade is the lowest as compared to trade among countries on other continents, and Africa’s share of global trade is depressing, considering the fact that Africa is the largest supplier of raw materials to the world’s factories. Africa’s mineral resources, notably, are fuelling growth and development in many industrialised and emerging economies of the world, and while Africa consumes very little of its own mineral resources, the continent exports most of it as raw materials, without mostly value addition.
The AfCFTA, therefore, has the potential to stimulate industrialisation, create jobs and accelerate development.
Africa produces more than 60 metal and mineral products and is a major producer of several of the world’s most important minerals and metals. Some of the minerals mined out of Africa include gold, diamond, PGE’s, silver, iron, uranium, bauxite, manganese, chromium, nickel, bauxite, cobalt and copper. Platinum, coal, and phosphates are also mined on the continent. Africa also has rich forests, marine and aquatic resources that have been exploited for years.
Considering the fact that Ghana and Ivory Coast are the largest producers of cocoa in the world, but mostly export the cocoa as raw material to feed the world’s $100 billion chocolate industry, but get very little of that revenue, a cocoa processing industry can be developed in a part of the continent with the conducive weather for chocolate production and storage. Countries can use their comparative advantages to create value addition for raw materials from other countries.
There is also opportunity for countries to explore industries in the semi-finished products sector and feed into the chain.
There is no justification for poverty in Africa, where more than half of the world’s poor live. Africa is effectively, the richest continent and yet with the largest number of poor people in the world.
Extreme poverty around the world has declined considerably, as new World Bank estimates suggest that the number of extremely poor people—those who live on $1.90 a day or less—has fallen from 1.9 billion in 1990 to about 736 million in 2015. However, the number of people living in extreme poverty is on the rise in sub-Saharan Africa, and they make up more than half of the extreme poor in 2015. Projections also point to the fact that by 2030, nearly nine in 10 extremely poor people will live in sub-Saharan Africa.
Current figures show that more 400 million people in Africa live in extreme poverty. The AfCFTA can serve as a catalyst to turn around the narrative.
Mr. Kwesi Quartey, the Vice Chair of the African Union, has said Africa is on the brink of a great breakthrough. He said with the AfCFTA in operation, Africa with a population of 1.2 billion could have a GDP of $4.5 trillion.
By Emmanuel K. Dogbevi
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