Fostering Intra-African Trade: African Continental Free Trade Agreement (AfCFTA)

By Chris Sevcik, Director of International Trade Services, WTCGP

The African Continental Free Trade Agreement (AfCFTA) now includes 54 of Africa’s 55 states and creates a $3.4 trillion economic zone of 1.3 billion people.  The AfCFTA allows for free movement of investments, business travels and creates a customs union to attract long-term investments and streamline trade.  

The goal of the AfCFTA is to increase international trade, but moreover expand intra-African trade.  Currently much of African trade must flow from a domestic African country to Europe or the Middle East and then back to an African Country rather than directly moving within the continent.  The challenges of transporting goods across boarders consumes an abundant amount of time and resources.  One prominent businessman in Philadelphia commented that it is cheaper and faster to ship products from China to Philadelphia than it is to ship products from Nigeria to Sierra Leon.  

​When the AfCFTA is fully implemented, 90% of all tariffs should be eliminated in five years, 7% within 10 years and the remaining 3% will be exempt from free trade. This elimination of tariffs is expected to double Intra-African trade from 18% today by 2030, according to the UN Economic Commission.

The AfCFTA will not greatly impact US companies today. There are still many barriers that the continent must contend with from delays at customs to developing road and rail systems to connect the ports, cities and countries.  It will take time to eradicate these issues; however, the AfCFTA demonstrates that the African continent is working together to ensure that they will be competitive globally.  This is a major step for the continent and one that must to be overlooked.  This step is the first step in a long march towards economic development across the continent.