As African countries kick off trading under the African Continental Free Trade Area (AfCFTA) agreement, President Paul Kagame has welcomed the latest development.
The African Union launched the start of the trading of the Continental Free Trade Area on January 1, marking a significant milestone towards the world’s largest free-trade zone.
“Cheers to the launch of Trading #AfCFTA, to those who put it all together and the rest of us who have to join in to make it work and worthwhile!!” Kagame said on Twitter.
The launch is a culmination of years-long negotiations between African countries, which started in 2018 when a landmark agreement was signed in Kigali by leaders of 44 countries.
So far, 54 countries out of 55 have signed the agreement, 33 have ratified it, and over 40 have submitted their offers. This signals that Africa is ready to start trading as a single market.
The agreement envisions a continental market of 1.2 billion people, with a combined Gross Domestic Product of more than $3.4 trillion.
The agreement will also boost the level of intra-Africa trade.
The launch of the trading takes Africa a step closer to the vision of an integrated market on the African continent as it will boost the continent’s manufacturing capability and increase exports.
“This African Continental Free Trade Area should not just be a trade agreement, it should actually be an instrument for Africa’s development,” Wamkele Mene, the Secretary-General of AfCFTA Secretariat said during the launch.
By 2025, the continent has the opportunity to lift out of poverty 100 million Africans majority of whom are women, cross-border traders, if it implements the AfCFTA effectively, according to the African Development Bank.
Mene said the start of trading offers an immense opportunity for the continent to overcome smallness of national economies, and to overcome a lack of economies of scale.
“We have to take active steps to make sure that we place Africa on a path to accelerated industrial development so that by 2035 we are able to double intra-African trade,” he noted.
It also means that trading across borders amongst African countries will be easier and cheaper. It also means increased opportunities for thousands of entrepreneurs and businesses.
Investors, too, will be able to do business on a single set of trade and investment rules across the African continent, overcoming market fragmentation that has characterized the continent for decades.
The President of the African Export-Import Bank (Afreximbank), Benedict Oramah said 400 African banks are on board to provide trade finance support to African businesses.
That number is expected to increase to 500 banks soon with a combined $8bn trade finance capacity in the next 18 months.