key term - African Continental Free Trade Area

Definition

The African Continental Free Trade Area (AfCFTA) is a trade agreement established to create a single market for goods and services across Africa, promoting intra-African trade by reducing tariffs and non-tariff barriers. This initiative aims to boost economic growth, enhance competitiveness, and support sustainable development by facilitating easier movement of goods between member countries.

5 Must Know Facts For Your Next Test

1. The AfCFTA was officially launched on July 7, 2019, during the 12th Extraordinary Session of the Assembly of the African Union in Niamey, Niger.
2. It is estimated that the AfCFTA could increase intra-African trade by up to 52% by eliminating tariffs on 90% of goods traded between member states.
3. The agreement aims to boost Africa's GDP by $450 billion by 2035 and create a continental market of over 1.2 billion people.
4. Member states are required to submit their tariff schedules, committing to reduce tariffs on imported goods within five years for most products.
5. The AfCFTA is expected to enhance the competitiveness of African industries and facilitate job creation across the continent.

Review Questions

• How does the AfCFTA aim to increase intra-African trade and what are some potential benefits of this increase?
  • The AfCFTA aims to increase intra-African trade by reducing tariffs on goods and removing non-tariff barriers among member states. This can lead to a significant boost in trade volume, making it easier for countries to exchange goods and services. Potential benefits include increased economic growth, job creation, and improved regional integration, which can enhance the overall competitiveness of African economies in the global market.
• Evaluate the challenges that member states may face in implementing the AfCFTA and achieving its goals.
  • Member states may encounter several challenges when implementing the AfCFTA, including differing levels of economic development, political instability, and capacity issues related to customs infrastructure and regulations. Additionally, there may be resistance from industries that fear increased competition from imports. Addressing these challenges is crucial for realizing the full potential of the AfCFTA and ensuring that all member countries benefit from increased trade.
• Assess the long-term implications of the AfCFTA on Africa's economic landscape and its position in global trade.
  • The long-term implications of the AfCFTA could significantly reshape Africa's economic landscape by fostering greater integration among member states and enhancing their collective bargaining power in global trade negotiations. If successful, the AfCFTA could position Africa as a more cohesive trading bloc, attracting foreign investment and facilitating technology transfer. This integration has the potential to transform African economies into more competitive players on the world stage, ultimately driving sustainable development and reducing poverty across the continent.

Related terms

Intra-African Trade: Trade that occurs between African countries, which the AfCFTA seeks to increase by eliminating barriers and tariffs.

Tariffs: Taxes imposed on imported goods, which the AfCFTA aims to reduce or eliminate to encourage trade among African nations.

Regional Economic Communities: Organizations that promote economic integration among countries in a specific region of Africa, serving as building blocks for the AfCFTA.