After years of preparation, the trading phase of the African Continental Free Trade Area (AfCFTA) finally kicked off on January 1, 2021.
With 54 of the 55 African countries having signed and ratified the agreement (Eritrea is the only country to not join the AfCFTA), it will be the largest free trade area in the world. It will cover a market consisting of 1.2 billion people and a combined GDP of $3 trillion.
It is also important for the AfCFTA that Nigeria, one of the most important trading countries in Africa has reopened its borders, after it closed its borders for months. Actions like Nigeria’s border closure is symptomatic of the problem the trade deal wants to solve.
In 2017, intra-African exports were 16.6% of total exports, compared with 68% in Europe, and 59% in Asia.
According to South Africa's President, Cyril Ramaphosa, “the birth of the African Continental Free Trade Area will fundamentally change the economic fortunes of our continent. It is the start of a new era of trade between African countries."
Despie his optimism, there’s no doubt that the trade agreement will face the problem of lack of infrastructure. In the end, it’s worth keeping an eye on in 2021 to see if it can live up to its goal of improving trade.