African free trade zone expected to begin in 2020

African Union
African Union
Image: GALLO IMAGES

A landmark African free trade zone due to be ceremonially launched at a summit in Niger this weekend is expected to take effect from July 2020, the African Union (AU) trade commissioner said Friday.

"We have recommended to the summit that the actual date of trading should be the 1st of July 2020," Albert Muchanga, in charge of trade and industry at the 55-nation bloc, told AFP.

"It is not yet definitive, the summit has to consider that recommendation," he said.

However, "the ministers of trade have accepted, so naturally you would expect that the head of states will."

"I am very optimistic, the passion is spreading and everyone is ready to work hard for the better," he added.

The launch of the African Continental Free Trade Area (AfCFTA), 17 years in the making, will be the major focus at the AU summit.

Nigeria, Africa's most populous nation and the most notable absentee to the deal alongside Benin and Eritrea, announced earlier this week that it would sign up to the AfCFTA in Niamey.

 

- 'Removing fragmentation' -

Muchanga said the accord, which will progressively phase out duties on 97 percent of goods traded between African countries, would be a spur for growth.

"The biggest benefit is you are removing the fragmentation of Africa," Muchanga said, predicting an influx of foreign capital that would create jobs and prosperity.

According to the AU, the zone, bringing together Africa's 1.2 billion people into the world's largest trade bloc, could increase intra-African trade by 60 percent by 2022.

Some however have feared that cheaper imports will hit small manufacturers and farming families.

Some countries would face a short-term hit to revenues but competition would drive innovation, Muchanga said.

A billion US dollars (890 million euros) in credit has been earmarked by the African Import and Export Bank for countries requiring support, he announced.

"Countries which will have adjustment costs then can have recourse to that facility which will assist them," he said.

 

- Devil in details -

The pact notionally came into being in late May after crossing the threshold of ratification by at least 22 countries.

AU members, after formally launching it Niamey, will then have to hammer out key details to make it operational.

Some of these are notorious pitfalls in trade liberalisation talks, say analysts.

They include a timetable for lowering customs duties, rules for certifying "Made in Africa" products and arbitration mechanisms to settle disputes.

Observers also caution that import duties are not the only obstacles to freer business -- corruption, decrepit infrastructure and lengthy waiting times at borders are also major deterrents to trade.

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