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Will Continental Free Trade End African Countries’ Isolationism?

On March 21, 2018, 55 African countries met in Kigali, Rwanda to sign the African Continental Free Trade Agreement, enabling countries to stimulate and reinforce the trade and economic development between one another.

African countries appear to be less interested in each other’s trade engagement with most of them importing goods from China and the rest of Europe. Will the Kigali continental free trade bring to and end this isolationism? We hope it does.

The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization. Every African country except Eritrea has signed on to the AfCFTA framework agreement, and 34 have sanctioned it.

The continental free trade includes several key features that will help build collaboration and encourage cooperation between the African countries, on matters of economic transformation, promoting economic growth and opportunities for businesses in the technical sectors, education, food processing, construction, technology devices, tourism and hospitality; and encouraging open trade relationships.

This could be good news to African countries as they can now freely trade amongst each other. As a result of this agreements, traditional trade protection measures such as tariffs and quotas are falling away. Because of these measures, most Africans believed that they should mind their own business internationally and let other countries get along the best they can on their own. This has been killing trade relationships among African countries, increasing dominance of China in the African markets and we hope it changes now.

The continental free-trade will have potential advantages to the private sector including increased economies of scale and access to cheaper raw materials and intermediate inputs; better conditions for regional value chains and integration into global value chains; catalyzing the transformation of African economies towards greater utilization of technology and knowledge; facilitating both intra-African and external direct capital flows to African countries, and creating a labor market and a demand-pull throughout the continent.

This agreement will hopefully boost trade among African neighbors while allowing the continent to develop its value chains.

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