Africa Continental Free Trade Area : Impact Assessment

African heads of state and government officials met in Kigali last month to sign a deal creating one of the world largest free trade blocs since the establishment of World Trade Organization.

- Nelius Kanyingi

The Africa Continental Free Trade area Impact Assessment (AfCFTA) will come into effect 30 days after ratification by the parliaments of at least 22 countries. Each country has 120 days after signing the framework to ratify.

This will be one of the world’s largest free-trade areas in terms of the number of countries, covering more than 1.2 billion people and over $4 trillion in combined consumer and business spending if all 55 countries join.

The UN Economic Commission for Africa (UNECA) has estimated the agreement’s implementation could increase intra-African trade by 52 percent by 2022, compared with trade levels in 2010.

One of its central goals is to boost African economies by harmonizing trade liberalization across sub regions and at the continental level. As a part of the AfCFTA, countries have committed to remove tariffs on 90 per cent of goods.

Foreign Affairs and International Trade Cabinet Secretary Ambassador Monica Juma says the African Continental Free Trade Area (ACFTA) will allow SMEs in the country to expand beyond the country boundaries.

Ambassador Juma, says that when the ACFTA is ratified in September 2018, SMEs and the informal sector will be allowed to move their goods and services across the continent.

“Across the continent, the informal sector is estimated to bring about an income of between 40-60 billion dollars a year, so the idea is to create a value chain that starts at the lowest level that creates that prosperity for Kenyans and any other African that is producing,” she says

The CS is banking on Kenyan SMEs innovativeness and level of entrepreneurship to compete favorably at the continental stage when the trade barriers come down.