The African Continental Free Trade Area (AfCFTA) Agreement will create “economies of scale with the larger market of over 1.3 billion people,” a senior United Nations official said Tuesday.
Antonio Pedro, Director of the United Nations Economic Commission for Africa Sub-regional Office for Central Africa, pointed out that “the advantage of having a free trade area in a balkanized continent like ours is the possibilities of creating economies of scale with a larger market of over 1.3 billion people, and a larger economy of 2.5 trillion U.S. dollars.”
“Since the first of January, we are now trading within the AfCFTA trade regime, which is something we should celebrate because this constitutes the largest free trade area agreement in the world, nominally speaking,” Pedro said.
The launch of trading under such a continental accord “will have a multiply effect, in that we would reduce our dependence on other markets,” hence “less-vulnerability to external shocks” like COVID-19, the director said.
Those multiply effects, he added, “would translate into a more sustainable growth and sustained growth, because there will be less-external shocks.”
The AfCFTA Agreement, which was launched in March 2018 in the Rwandan capital, Kigali took effect on Friday. It has so far gathered 54 African Union member signatories.
The agreement, according to him, would also help improve the welfare of the African population and eventually bring about inclusive growth.
Pedro said AfCFTA is expected to enhance production capabilities, an urgency on the continent and precondition for the agreement’s further implementation. “We trade with one another, if we can’t produce.”
He as well called for efforts to fully unleash the potential of AfCFTA, including facilitating the movement of people and services, removing non-tariff barriers and improving physical integration.
The UN official stressed that Regional Economic Communities are “the building blocks of the establishment of the African economic communities,” in which the continental free trade accord facilitates regional economic integration within Africa.
According to him, the accord has the potential to boost intra-Africa trade by more than 52 percent by the year 2022.