South African President Cyril Ramaphosa says the coming into effect of the Africa Continental Free Trade Area Agreement (AfCFTA) is a milestone that fulfils a dream crafted by the founders of the Organisation of African Union 60 years ago when they mulled an integrated continent.
At a summit in Niger on Sunday, African leaders launched the AfCFTA during which committees signatories agreed to remove tariffs from 90% of goods, allowing free access to commodities, goods and services across the continent.
A statement from the Presidency said Ramaphosa expected the agreement to catapult the economies of many African countries onto a higher growth trajectory. He said South Africa stood to significantly benefit from being part of the world’s largest single market encompassing 55 countries with a combined population of 1.2 billion people and a combined gross domestic product of US$3.2 trillion.
“The president sees the implementation of the agreement as a platform for African countries to trade among themselves and reap the benefits of the tariff-free area,” Ramaphosa’s office said.
“One of the key spin-offs is expected to be greater focus and urgency for infrastructure development across the continent to support economic activities.”
Nigeria, which boasts one of Africa’s largest economies, was one of the last countries to commit to the deal.
This would give the AfCFTA even more relevance, said TC Chetty, South Africa country manager for the Royal Institution of Chartered Surveyors (RICS).
“It is a welcome move by Nigeria and gives the AfCFTA more clout, with 54 countries having now signed,” Chetty said in a statement.
“The free trade agreement holds great promise for Africa and there was a lot of enthusiasm around it at the recent RICS summit … in Johannesburg.”
Ipeleng Mkhari, the CEO and founder of Motseng Investment Holdings who gave a keynote address at the RICS summit, said the AfCFTA would enhance the competitiveness of the private sector at a rapid rate.
“At enterprise level, it will provide opportunities for scaled production, continental markets, access and better allocation of resources – not least of all capital, finance and labour,” she said.
Noting that AfCFTA had the potential to lift intra-African trade by more than 52%, simply by eliminating import duties, Mkhari, however, said there were “blind spots” or challenges to the agreement that required a plurality of responses.
“Trade is key, but harmonisation is paramount,” she said.
“There’s an urgent need for open skies as current air movement is expensive and inefficient in Africa. We need open borders for a smooth marketplace. Also, more work is needed around harmonising investment and prudential guidelines.”