The African Continental Free Trade Area (AfCFTA) was officially signed at the African Union Assembly in Kigali, Rwanda on March 18, 2018.
It is considered a major step towards economic integration within the continent. Its goal is to establish a single market which promotes Intra-Africa trade, allowing free movement of people and investments. As of today, the Agreement has been signed by 52 countries and ratified by 22 countries (the minimum required for the agreement to enter into force). However, Nigeria, Benin and Eritea are the remaining countries to sign it.
The free trade has the potential to boost growth and solve some of the trade issues currently facing the continent. I strongly believe it can eliminate the high trade tariffs between Africa countries and provide a solution to continuous border delays. I certainly admire the efforts made by regional economic organisations in negotiating the rules to be embedded in the final agreement.
However, the Agreement mentions very little about Exchange Controls and personally think this a matter which needs to be addressed urgently if the goal is to encourage investments between African states. It is unclear whether Exchange Controls will be lifted or at least eased for countries participating in the free trade area. From my understanding on this matter, majority of African states often face cash shortages which triggers tighter controls to prevent movement of capital to other countries. In my view, this will be crucial in order to boost business activities in the free trade area. Also, it will be interesting to know how the free trade area will accommodate goods and services from countries such as Nigeria which are yet to sign the Agreement.