African Continental Free Trade Agreement (AfCFTA) May 30th Enactment

The African Continental Free Trade Agreement is the world’s largest free trade agreement which officially went into effect on May 30 2019.The ratification of the agreement reflects the enormous political will of African leaders to overcome the complexities of significant differences in their countries’ annual per capital incomes, languages, and legal systems in order to achieve African economic integration. The execution of AfCFTA has the potential to double Africa’s gross domestic product (GDP) to $2.5 trillion per year, and will set in motion significant improvements in competitiveness that will reshape global value chains. The objective of this agreement is then to engender more intra-African Trade. However, to make a meaningful impact, it should improve the quality and quantity of intra-African trade which is still low. Currently, the Intra-African trade is only of 15 % when in Europe it is 67%, in Asia 58% and North America 48 %. The vision of the ACFTA is to increase intra-African trade by at least 50% in five years.

This agreement will be implemented in two phases

Phase one will set Africa on the road  to rapidly increase its efficiency, trade diversification, and prosperity: businesses will benefit from lower transaction costs brought by tariff elimination on ninety percent of goods and mechanisms to streamline customs procedures; citizens, particularly youth, will benefit from increased employment opportunities; and investors will gain an expanding field of investment opportunities with high yield potential.

 Under AfCFTA, intra-African trade is expected to grow by 52.3 percent by leveraging and integrating existing regional economic communities (RECs) across the continent. The elimination of tariffs and excessive customs procedures will enable the development of regional value chains, where smaller African countries can produce parts that are integrated and exported by company hubs based in larger countries. This development will grow manufacturing employment opportunities and stimulate the growth of critical ancillary service industries—including, telecommunications, finance, and logistics—that will support Africa’s competitiveness in the goods trade. Increased African regional and global trade will grow consumer demand which will spur increased foreign and domestic private investments across many sectors – for example in health, creative industries, and IT, and will benefit Africa’s small and medium-sized business community. Ultimately, AfCFTA has the potential to transform Africa by facilitating the development of nascent industries like manufacturing, diversifying exports and reducing dependence on volatile commodity markets, and providing investors with attractive opportunities to invest in infrastructure or innovative digital and green business solutions. The greater ease of doing business between African countries will translate to more, and safer, investment opportunities for international businesses

Unlocking the full potential of AfCFTA will require significant hard infrastructure investments in roads, ports, and airports, as well as soft infrastructure that will eliminate red tape and facilitate more efficient cross border procedures.  Investors should be encouraged by the potential for significant returns on investments, the creation of value chains and new business development can bring said the CEO of the Corporate Council on Africa.

 Phase two of the Africa Continental Free Trade Agreement will begin in August 2019. At this point, member states will shift their attention to developing subsidiary agreements on investor protection, competition policy, and intellectual property rights.

The execution of AfCFTA has the potential to double Africa’s gross domestic product (GDP) to $2.5 trillion per year, and will set in motion significant improvements in competitiveness that will reshape global value chains. According to the International Monetary Fund (IMF ) Africa will generate The International Monetary Fund (IMF), under a successful implementation of the African Continental Free Trade Agreement, Africa will generate combined consumer and business spending of over $4 trillion and a significant increase in Africa’s overall ranking on the Global Competitiveness Index in the short and medium term. Furthermore, investors should be encouraged by the African Union’s estimation that African markets will grow twice as fast as the developed world through 2050.


The African Growth and Opportunity Act (AGOA) is a nonreciprocal trade preference program that provides duty-free export access to the United States’ (U.S.) market of over 6,400 products from eligible sub-Saharan African (SSA) countries.