Wednesday, July 10, 2019

Leaders of African Union (AU) member states met in Niamey, Niger’s capital, for an AU summit where on Sunday Presidents Muhammadu Buhari of Nigeria and Patrice Talon of Benin signed the African Continental Free Trade Area (AfCFTA) agreement.

Nigeria previously announced it planned to join the AfCFTA in the week leading up to the summit. AU trade and industry commissioner Albert Muchanga announced Benin was to join. The commissioner said, “We haven’t yet agreed on rules of origin and tariff con[c]essions, but the framework we have is enough to start trading on July 1, 2020”.

Niger’s president Mahamadou Issoufou said, “Nigeria is Africa’s biggest economy and most populous country. Without Nigeria the free trade zone would’ve been handicapped.”

The agreement seeks to remove tariffs on 90 percent of commodities and better intregrate African economies.

At the opening of the AU summit, AU chairperson President Abdel Fattah el-Sisi of Egypt said, “The success of the AfCFTA will be the real test to achieve the economic growth that will turn our people’s dream of welfare and quality of life into a reality”.

With Sunday’s signings, all but one of the member states of the 55-member AU have signed on to the agreement, with Eritrea the only state unsigned. African leaders have negotiated the deal over the last four years. While 54 nations have signed onto the AfCFTA, only 27 have ratified the agreement.

While many transactions in Africa occur using U.S. dollars or euros, the AU announced an electronic pan-African payment system.African Export–Import Bank president Okey Oramah said the use of third-party currencies “costs Africa between $5 and $7 billion,” further saying, “Beyond that, it also reduces trade because Africa has a scarcity of foreign exchange.”

There are reportedly 1.3 billion people in the free trade area, with the combined economies of the countries worth US$3.4 trillion. One of the stated goals of AfCFTA is to encourage more intra-Africa trade. Currently about 16–17 percent of African trade occurs between African countries. This is in contrast to the European Union members, where intra-European trade accounts for over 60 percent of trade.

The International Monetary Fund said in May the AfCFTA might be for African countries comparable to the European and North American trade blocs as an “economic game changer”.

Seven members states had bid to host the AfCFTA secretariat, the operational organ of the free trade agreement, with Ghana winning the bid.