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African Development Bank helps to break down the barriers to free trade in Africa

01-Apr-2019

A year after the signing of the African Continental Free Trade Agreement ( AfCFTA)in Kigali by 49 African states, and following the ratification of the agreement by Ethiopia on the first anniversary on 21st March, only one more state is now required to reach the minimum requirement of 22 ratifying states. This will confirm its entry into force, contributing to the creation of one of the potentially biggest free trade areas in the world.

"Progress made on the free-trade area is particularly encouraging," said the Chair of the 32nd session of the Executive Council of the African Union, Moussa Faki Mahamat, in Addis Ababa on 10 February 2019, referring to "the current pace of ratification".

With the robust support of the African Development Bank, the continent is beginning the final stage of its giant economic project: to integrate the 55 African countries and create a common market with a cumulative GDP of $2,500 billion. "Implementation of the CFTA will result in a net gain of $2.8 billion in real income for Africans," said the Bank's Macroeconomic Policy Director, Hanan Morsy, who estimates that the AfCFTA will lead to a 15% increase in intra-African trade.

Since 2010, economic and social integration projects financed by the Bank have multiplied, breaking down barriers between states and economic zones.

From Abidjan to Tunis, from Accra to Bamako, Dakar, Ouagadougou and Niamey, the construction of major road corridors and the convergence of customs systems have facilitated the movement by land of goods and people. From Yaoundé to Lusaka and Brazzaville, from Casablanca to Algiers, the creation of electrical interconnections and renewable energy projects has woven a web linking the capital cities of Africa and enabling millions of households to be lit by electricity.

Lastly, the modernisation of the continent's airports -  Cairo,  Johannesburg, Addis AbabaNairobi and Banjul - has enabled the liberalisation of African skies by the creation of a single air transport market called the 'African Air Transport Market (SAATM). Launched in January 2018, it will remove obstacles to air connectivity in Africa.

To support these initiatives, a 'Visa Openness Index' (VOI) has been established under the auspices of the African Development Bank and its partners - the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Africa (UNECA). Since its launch in 2016, several African countries have reformed their systems for the issue of visas, to simplify the movement of people on the continent.

Africa is making great strides on its regional integration by facilitating inter-regional trade. "We are determined to continue our support for the African integration agenda, because this will lead to sustainable growth, will help the continent withstand external pressures and will enable African businesses to develop and become global giants,"said Gabriel Negatu, Director-General of the African Development Bank in East Africa.

Mr Negatu also said that the Bank is working to open up the continent. It has invested and will continue to invest several million dollars in the creation of trade corridors and infrastructure, including interconnected power grids. Not to mention the Bank's objective of securing the establishment of a common passport in all African countries. "Integration will bring cities closer together. Implementation of the Continental Free-Trade Area (CFTA) will boost cross-border trade. It will remove the frontiers that separate people. Jobs will be created for young Africans. They will be given opportunities to change Africa," Mr Negatu concluded

The CFTA, an essential link in Africa's economic growth 

Part of the African Union's Agenda 2063, the Continental Free Trade Area (CFTA) was no more than an embryonic project in 2012. In just seven years, this project has gained pace in a manner never seen before on the continent in the field of integration and development. The CFTA has been adopted by 49 of the 55 African States, 18 of which ratified it in 2018. What is now needed is for 22 States to have ratified it by March for its effective implementation, planned for April 2019. This prospect is of strategic importance for Africa due to the development expected from the trade between its member countries.

 "We have reserved a $5 million grant for the African Union Commission under the heading of the regional arm of the Bank's public assets which will, among other things, help the Commission to achieve this goal. The tools that we are developing in the Bank will accelerate implementation of regional integration commitments made by regional member countries," said Moono Mutopola, African Development Bank Director of Regional Integration.

The CFTA will consolidate the tripartite free-trade area that includes firstly, the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC); secondly, the Economic Community of Central African States (ECCAS), the Economic Community of West African States (ECOWAS); and thirdly, the Arab Maghreb Union and the Community of Sahel-Saharan States.  Its economic weight (total GDP) is estimated at $2500 billion. By 2028, the CFTA should extend to the whole continent and lead to a common market and economic and monetary union.


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