Power Infrastructure and Financial Inclusion – Tools for winning under the African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA) was created with the primary objective of creating a single African continental market for goods and services, with free movement of goods, services and investments. The AfCFTA, when fully implemented, will be the world’s largest free trade area by number of participating countries since the formation of the World Trade Organisation (WTO) and will cover a market of more than 1.2 billion people with a combined gross domestic product (GDP) of more than US$3.4 trillion.
The AfCFTA Agreement creating the AfCFTA was initially signed by 44 member states of the African Union (AU) in Kigali, Rwanda on 21 March 2018. As of July 2019, 54 of the 55 AU member states had signed the AfCFTA Agreement with 30 of those countries having ratified the AfCFTA Agreement. Trading under the AfCFTA Agreement was due to commence on 1 July 2020, however, this date has been postponed due to the global impact of COVID 19 pandemic on trade and economic activities. A new date is yet to be confirmed.
The benefits of a successful implementation of the AfCFTA far outweigh its disadvantages. The postponement of trading commencement will afford member countries the opportunity to intensify preparations for the implementation of the AfCFTA. Despite the overall benefits of the AfCFTA, there will be winners and losers. This article explores the implications of power infrastructure and financial inclusion, two factors that will determine whether a member country will win or lose under the AfCFTA.
- The AfCFTA: A Brief History
Prior to the advent of the AfCFTA, countries in Africa had Regional Existing Communities (RECs). The RECs, proposed by the 1980 Lagos Plan of Action for the Development of Africa, and the Abuja Treaty of 1991 establishing the wider African Economic Community, had the objectives of facilitating economic integration among and between members of the individual regions with a view to eventual continental integration. There are eight (8) RECs, recognized as the building blocks of the AU: the Arab Maghreb Union (AMU), the Community of Sahel-Saharan States (CEN-SAD), the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), the Economic Community of Central African States (ECCAS), the Economic Community of West African States (ECOWAS), the Intergovernmental Authority on Development (IGAD), and the South African Development Community (SADC).
In January 2012, the AU, recognizing that the promotion of intra-African trade is a fundamental factor for sustainable economic development, employment and effective integration of Africa into the global economy adopted the Decision to establish a Continental Free Trade Area (CFTA) during its eighteenth ordinary session held in Addis Ababa, Ethiopia.
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