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