Members of Africa’s new free trade area should complete their tariff reduction schedules and finalise essential rules of origin by July, according to a senior official at the bloc’s secretariat.
Following months of delays caused by the global Covid-19 pandemic, African countries began officially trading under the African Continental Free Trade Area (AfCFTA) on January 1, 2021.
READ: AfCFTA: Nigeria submits Instruments of Ratification, becoming the 34th State Party
Despite the urgency with which the tariff reduction and rules is to be finalised, experts believe full implementation of the deal may take years.
Under the agreement establishing the AfCFTA, members must:
- Phase out 90% of tariff lines over the next five to 10 years.
- Another 7% considered sensitive will get more time, while 3% will be allowed to be placed on an exclusion list.
READ: ECOWAS ministers recommend gradual re-opening of borders
As of the time of reporting, forty-one of the zone’s 54 member states have submitted tariff reduction schedules.
The members are also expected to complete and submit the rules of origin in addition to tariff reduction schedules. The rule of origin is a key factor for determining which products can be subject to tariffs and duties.
READ: AfCTA: Effective implementation to boost Africa’s export by $560 billion
What they are saying
During a panel discussion at the Reuters Next conference on Monday, Silver Ojakol, Chief of staff at the AfCFTA Secretariat, submitted that nearly 90% of the rules of origin has been agreed on.
- “So, the remaining 10% must be completed by July this year. By the end of June, we should have completed both the tariff scheduling and the rules of origin.”
READ: AfCFTA committee says infrastructure deficit will not inhibit Nigeria’s participation
Ojakol noted that the remaining obstacles were not simply related to tariff harmonisation, but to infrastructure deficit. To this end, He asserted that:
- “The biggest challenge perhaps is infrastructure interconnectivity to ease trading.”
READ: Eco currency: Collaboration is crucial for success
Fola Fagbule, Senior Vice-President at the Africa Finance Corporation (AFC), stated during the discussion that:
- “I do think there are a lot of green shoots, a lot of bright spots on the horizon in terms of investor appetite for infrastructure in Africa.”
What you should know
- Nairametrics reported on 5 January 2021 that the AFC recently secured $250 million in financing from the U.S. Development Finance Corporation to help fund infrastructure projects on the continent.Given that physical infrastructure systems ensure that basic human needs are met, the funding, if properly utilised, is expected to go a long way in the provision of crucial infrastructure for economic and social development across Africa.
- The African Continental Free Trade Area (AfCFTA) is a free trade area founded in 2018, with trade commencing as of 1 January 2021. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.
- It is flagship project of the African Union’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years.
- The AfCFTA agreement is a trade deal designed to remove barriers to intra-Africa trade among member states and seeks to connect 55 African Nations with 1.3 billion consumers by creating a single $3.4 billion market with an estimated combined gross domestic product (GDP) of more than US$2.5 trillion.
- Nigeria signed the AfCFTA in July 2019, becoming the 53rd member state.