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Understanding Africa Free Trade Areas (AfCTA)

By Emmanuel Ozoemena

For some time now, there have been series analysts that sought to engage the Africa Free Trade Area (AfCTA) Agreement that came into force in June 2018.

 I am surprised about the quality of conversation in the public space. I have read on several platforms misguided views that tends to mis-educate citizens on the Africa Free Trade Areas  (AfCTA). Some writers either because of poor understanding of core objectives,  erroneously confuse AfCTA with Free Trade zones.  They completely missed the point about the intendment of the African Continental Free Trade Areas (AfCTA).

The fact is that AfCTA framework has nothing to do free trade zone as alluded by these authors. African heads of States and Government in a bid to promote intra-Africa trade that the volume of trade that occurs between countries agreed on the framework for AfCTA in 2014.

 Currently, intra-Africa trade is approximately 14% annually. This is not good for the Continent which will require movement of good and services regionally as opposed trading with Europe, Asia and the Americas. 

The AfCTA intends to increase intra-tegional to over 60% in the next years. Leveraging Africa’s population of over 1.6 billion people to stimulate trade resulting increase productivity and growth in real sector as well as job creation. It seeks also to address common barriers to trade including tariff and custom duties by creating a regional platform including custom union to encourage free movement of goods and services.

Accra, Ghana hosts the AfCTA Secretariat providing the administrative support to the special purpose vehicle for the  implementation of the framework aimed scaling  intra regional trade. It is a  misnomer to assume that Accra becomes the new trade hub in Africa. That is really a poor understanding of the raison detre  for setting up AfCTA.

 In Africa the most industrialised country in Africa is South Africa, hence there is no way Ghana will take over that position just because it is hosting AfCTA headquarters. Nigeria is still the largest economy in Africa with South Africa, Egypt and Kenya in second, third and fourth positions.

Secondly, free trade zone is not the same as Free Trade Areas. The two concepts are poles apart. The former focuses on providing cluster of industrial activities to a given  locations to enable them enjoy economies of scales, incentives by government as tax holiday, provision of infrastructure, transportation network. The later focus on multi-lateral framework by countries within a given region to create a harmonised tariffs and legislation that will fast intra-regional trade.

So the author gave a wrong proposition when he argued that Nigeria had lost her position as trading hub in Africa. In fact trade is a function of production and consumption capacity.

Therefore, we can safe surmise that Nigeria’s population places her on the lead as the country of destination in trade facilitation. Every country in Africa will want to have a share of Nigeria’s trade opportunities.

I hope you find my intervention useful in understanding the AfCTA.

 Emmanuel Ozoemena, is public policy consultant.

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