Heads of State and Government who attended the just-ended 28th Ordinary Summit of the African Union here have signed the Continental Free Trade Agreement (CFTA) which is aimed at ensuring significant growth of intra-Africa trade.
The CFTA will also assist African countries to use trade more effectively as an engine of growth and for sustainable development, reduce the vulnerability of the continent to external shocks, and enhance the participation of Africa in global trade as a respectable partner, thereby reducing the continent’s dependence on foreign aid and external borrowing.
This was made disclosed at the closing ceremony of the Summit Tuesday. The agreement is in furtherance of the commitment made by African leaders in Addis Ababa in 2012 towards the establishment of the CFTA.
At the 18th AU summit held in January 2012 in Addis Ababa, the leaders endorsed an Action plan to boost intra-Africa trade through the operationalisation of the CFTA by 2017.
The Action Plan was specifically aimed at deepening Africa’s market integration, and significantly increasing the volume of trade that African countries undertake among themselves. The plan also outlined a programme of activities required to remove all bottlenecks and obstacles to intra-African trade.
A key feature of African trade is its low level of intra-African trade, insignificant share of global trade and high external orientation. Intra-Africa trade accounts for only 10 per cent of Africa’s total trade compared with about 60 per cent, 40 per cent and 30 per cent intra-regional trade achieved by Europe, North America and the Association of South East Asian Nations (ASEAN) respectively.
At around three percent, the share of Africa in global trade is insignificant. In terms of the direction of Africa’s trade, exports are mainly to Europe and the United States (57 per cent) and in recent times to China.
Again, with the numerous free trade areas existing across the globe, Africa has no choice but to reduce its vulnerabilities with the creation of a CFTA, which will create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.
Additionally, the CFTA aims to expand intra-African trade through better harmonization and co-ordination of trade liberalization and facilitation regimes, as well resolving the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
Source: NAM NEWS NETWORK