On March 21 this year, African Heads of State met in the Rwandan capital of Kigali for an extraordinary summit where they signed the framework agreement on a Continental Free Trade Area (CFTA). The decision to meet, consider and sign the agreement was taken by Africa’s political leaders at the 30th Ordinary Session of the African Union (AU) summit that ended on January 29, 2018 in the Ethiopian capital, Addis Ababa.
The objective of the CFTA is primarily to engender more intra-African trade, which currently comprises just 15% of the continent’s total merchandise trade. When compared with intra-regional trade for other continents – 67% in Europe, 58% in Asia and 48% in North America – this is quite low.
When the CFTA vision becomes a reality, intra-African trade could increase by at least 50% over the next five years, according to some estimates. A market of more than 1.2bn people with a combined GDP of US$2.2trillion is a far stronger bulwark against limiting external trade forces than the tiny ones that inevitably get overwhelmed in negotiations with big countries – even as stand-alone economies – like the US, Britain and China.
Forty-four (44) countries in Africa signed up to the framework agreement in Kigali; and following that event, four countries – namely Ghana, Kenya, Rwanda and Niger – have ratified the agreement, which leaves 18 other countries needing to ratify the agreement to enable it enter into force.
Initially, President Muhammadu Buhari, who attended the Kigali summit, expressed some misgivings – pleading for more time to consult with captains of businesses in Nigeria and other key stakeholders before taking a position on the continent-wide deal.
Well, this Paper is happy to learn that the Nigerian president gave a strong indication last week Wednesday that the deal will be signed soon. This is important, since Nigeria and South Africa constitute the two biggest economies in Africa.
The Nigerian president, in hosting his South African counterpart, President Cyril Ramaphosa, indicated that in trying to guarantee employment and goods and services in his country, he had to exercise caution in signing agreements that would compete against Nigerian industries. That is within his purview, but this Paper is equally happy that he has finally weighed the pros and cons of the agreement and come to the realisation that Nigeria cannot afford to swim against the tide, so to speak.
With this move, this Paper is left in no doubt that the remaining four countries which are yet to sign the agreement will take a positive cue from Nigeria and approve the ground-breaking deal that is bound to propel the continent to a higher economic pedestal.