Development
Africa’s New Free Trade Agreement Could Mark the Dawn of a New Era By Chris Hattingh
THE AFRICAN CONTINENTAL FREE TRADE AREA (AFCFTA) (https://au.int/en/cfta) came into force on 1 January, 2021. Once it becomes fully implemented and operational by 2030, the AfCFTA could be the world’s biggest fully-realized free-trade zone by area. The bloc has a potential market of 1.3 billion people and a combined gross domestic product of $2.5 trillion. This moment should be celebrated as the AfCFTA could portend a new era of African openness, co-operation, trade, progress and innovation. The momentum of this new trade area thereof should be used to push African governments even further in the direction of free trade. Whenever a nation restricts economic freedoms and civil liberties, humanity suffers. The ease with which people can trade (from the simplest good and service, to the most complicated) with 28
January-February 2021
both their immediate neighbors, and people from all over the globe, is a good indicator of a given government’s view of economic freedom. When countries have more barriers to trade, including arbitrary regulations, widespread corruption, and myriad tariffs, we find a generally lower quality of life. Over time, the AfCFTA will aim to eliminate import tariffs on 97% of the goods traded on the continent itself, while also reducing non-tariff barriers. Tariffs serve to discourage not just the physical movement of goods across borders, but also act as a psychological barrier to the exchange of ideas. They also prevent the flow of crucial goods and services in the case of an emergency. In 2020 alone, tariffs and other levies made the movement of COVID-19-fighting equipment and medicines far slower and more expensive than it otherwise DAWN
www.africabusinessassociation.org
