The African Continental Free Trade Agreement (AfCFTA) is now a reality after Nigeria – the largest economy in the region signed up meaning that 54 of the 55 eligible countries are now members. This is not only a significant boost for Afric but also for World GDP as prior to the agreement only 16% of regional trade took place between African countries.
Nigeria will be big beneficiaries of the FTA Agreement having the Continents largest Economy
Image MOdAMO/Shutterstock
Why this is A Huge Step
Once all 55 African countries join a free trade area (Eritrea is currently the only abstainer and will likely join soon), it will form the world’s largest (by the number of countries) free trade block, covering more than 1.2 billion people which currently has a combined GDP of around $2.5 Trillion. Tariff-free access to this huge and unified market will encourage manufacturers and service providers to scale up so benefitting from economies of scale, which in turn will lower unit costs. This should lower prices and so increase demand, which will, in turn, increase the need for labour so helping with the areas chronic unemployment problems.
Currently, a trip to a large supermarket in one of the countries will typically show shelves stocked with staple goods imported from the likes of China & Europe, despite the same products often being manufactured in neighbouring countries. This seems like madness, however, the presiding patchwork of trade regulations and tariffs made regional trade so cumbersome and expensive shipping goods from halfway around the world was the easy option.
Continent wise at least one African country produces virtually everything the shops need and the lower costs shorter logistical routes and now red-tape free importation means that regional trade should boom.
