ANNIVERSARY SPECIAL
The African Continental FTA aims to create a single market for goods and services in Africa . By 2030 , the market size is expected to include 1.7 billion people with over $ 6.7 trillion in cumulative consumer and business spending – that is if all African countries have joined the FTA by then . Ten countries , including Nigeria , have yet to sign up .
The goal is to create a single continental market for goods and services , with free movement of business persons and investments .
The agreement has the potential to deliver a great deal for countries in the continent . The hope is that the trade deal will trigger a virtuous cycle of more intra-African trade which , in turn , will drive the structural transformation of economies – paving the way for a transition from low productivity and labour intensive activities to high productivity and skill-intensive industrial and service activities . This , in turn , will generate better paid jobs and serve to decrease poverty levels in the continent .
But signing the agreement is only the beginning . For it to come into force , 22 countries must ratify it . Their national legislative bodies must approve and sanction the framework formally , showing full commitment to its implementation . Niger President Issoufou Mahamadou , who has been championing the process , aims to have the ratification process completed by January 2019 .
Cause and effect
Some studies have shown that by creating a pan-African market , intra-Africa trade could increase by about 52 percent by 2022 . Better market access creates economies of scale . Combined with appropriate industrial policies , this contributes to a diversified industrial sector and growth in manufacturing value added .
Manufacturing represents only about 10 percent of total GDP in Africa on average . This figure falls well below that of other developing regions . A successful continental free trade area could reduce this gap . A bigger manufacturing sector will also result in more well-paid jobs , especially for young people . This , in turn , will help poverty alleviation .
Industrial development , and with it , more jobs , is desperately needed in Africa . Industry represents one-quarter to one-third of total job creation in other regions of the world . A young person in Africa is twice as likely to be unemployed when he or she becomes an adult . This is a particularly stressful situation given that over 70 percent of sub-Saharan Africa ’ s population is below the age of 30 years .
In addition to this , 70 percent of Africa ’ s youth live on less than $ 2 per day .
The continental FTA is expected to offer substantial opportunities for industrialisation , diversification , and high-skilled employment in Africa .
The single continental market will also offer the opportunity to accelerate the manu-
2018 • Africa Day Special • 23