With the world being a global village, trade is an important economic factor for the development of many economies. Trading dates back to centuries where an early form of trade- barter saw the direct exchange of goods and services for other goods and services. As time evolved and globalization emerged, trade changed, becoming broader and more complex. The formation of trade blocs, such as the European Union (EU) and the Pacific Alliance, paved the way for policies such as free trade, constituting bilateral and multilateral trade, which greatly expanded market access and spurred economic growth.
According to the African Development Bank, in 2014 only 16% of international trade took place between African countries. The United Nations Conference on Trade and Development (UNCTAD) also reports that Intra-African exports were 16.6% of total exports in 2017, compared with 68.1% in Europe, 59.4% in Asia, 55.0% in America and 7.0% in Oceania.
The African Continental Free Trade Area is widely seen as a crucial driver for economic growth, industrialization, and sustainable development in Africa. The agreement seeks to create a single African market of more than a billion consumers with a combined GDP of U$2.5 trillion. Through its various protocols, the AfCFTA Agreement addresses trade in goods (tariff liberalization schedules, non-tariff barriers, rules of origin), trade in services, competition, investment, and intellectual property. It is expected to boost intra-African agricultural trade, currently estimated to be less than 20 percent of total agricultural trade.
Despite its prospects, there continue to be implementation challenges that could thwart the efforts of the agreement.
By Albert Ludwig Botchway | AmCham Communications
