Does 'AfCFTA' which forms the world's largest free trade zone change African economy?
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The African Continental Free Trade Agreement (AfCFTA) is an agreement that forms a free trade zone in the member states of the African Union (AU) , removing obstacles such as tariffs. If AfCFTA succeeds, a $ 3.4 trillion (about 370 trillion yen) economy area with a population of 1.3 billion people will be created, and it will be the largest free trade area after the establishment of the World Trade Organization , and AfCFTA The world's attention is on whether it will be a game changer that changes the African economy.
African leaders launch landmark 55-nation trade zone | News | DW | 07.07.2019
https://www.dw.com/en/african-leaders-launch-landmark-55-nation-trade-zone/a-49503393
Economic 'game changer'? African leaders launch free-trade zone-Reuters
https://www.reuters.com/article/us-africa-trade/economic-game-changer-african-leaders-launch-free-trade-zone-idUSKCN1U20BX
Nigeria and Benin signed AfCFTA on July 7, 2019 at the AU Summit in Niger . Of the 55 countries affiliated to the AU, 54 countries except Eritrea have announced their participation in AfCFTA.
The participation of Nigeria, Africa's largest economy, is expected to further strengthen the influence of AfCFTA. Mr. Musa Faki , chairman of the AU Commission, stated that the Nigerian signature is a 'historical moment' at AfCFTA. At the opening ceremony of the Summit on the 7th, the president of Egypt and the AU chairman, Abdulfattav A-Sea , commented, 'The eyes of the world are facing Africa.'
AfCFTA is expected to strengthen Africa's trade and supply chain, boost the economy on the African continent, and strengthen Africa's overall bargaining power on the international stage. AfCFTA is expected to be operational from July 2020, said Albert Muchanga , AU Trade Chair.
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As of 2017, trade in the AU region accounts for only 17% of all trade in African countries, and trade between geographically similar Africa compared to figures such as 59% in Asia and 69% in Europe. You can see that is poor. AfCFTA is trying to increase trade between Africa by eliminating tariffs etc. However, economic experts are not effective in terms of poor roads and railways, existence of politically unstable countries, strict border control and widespread corruption. Pointed out that there are still many obstacles to the formation of a free trade zone.
Nevertheless, elimination of tariffs on almost all products is expected to increase intraregional trade by 15-25% over the medium term. However, the International Monetary Fund (IMF) stated that 'the abolition of tariffs alone is not enough,' and argues that trade in the AU will increase by up to twice by solving other problems in the AU. You are
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Although it is AfCFTA that almost all countries announced participation, only about half of the countries have actually ratified it with domestic approval. One of the reasons why the negotiations have not been successful is pointed out that 'each country has different benefits from joining AfCFTA'.
For example, in countries such as Nigeria, which are heavily dependent on oil exports, although the industry is not diversified, developed countries have less benefit for AfCFTA participation. Nigerian officials have expressed concern that participation in AfCFTA has led to a proliferation of low-priced products in the country, which could significantly damage the domestic manufacturing industry, which is in a difficult situation. By contrast, in countries like Africa, where South Africa is the most developed manufacturing sector, export markets are likely to expand rapidly and benefit greatly.
In addition, differences in economic size among countries are another factor that complicates negotiations on AfCFTA. Three countries, Nigeria, Egypt and South Africa, account for more than 50% of Africa's total GDP , far exceeding other countries. Amaka Anku, an analyst specializing in Africa in the Eurasia group of consulting firms, said that the participation of almost all countries including Nigeria in AfCFTA is a positive step, but the success of the free trade zone actually Said that there is still a long way to go.
by jozuadouglas
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