"The African Continental Free Trade Area will change the economic fortunes of our continent," said South Africa’s President Cyril Ramaphosa, who is also the leader of the African Union (AU).
At the virtual launch ceremony, the AfCFTA Secretary Wamkele Mene pointed out that this new trade deal will provide the continent with an opportunity to fight poverty and dismantle the inherited colonial economic model.
The AfCFTA has a GDP of about US$3.4 billion and a potential market of 1.2 billion consumers, which could expand to 2.5 billion people by 2050.
It is one of the most significant milestones towards African integration into the global economy, but it is not without challenges that could make true trade integration difficult.
Reducing poverty among rural households and protecting ecosystems and biodiversity on which these households depend for their basic needs of subsistence agriculture, safe drinking water and forest products is one of the challenges faced by most countries in sub-Saharan Africa. pic.twitter.com/xTVnTXVBK8
Currently, Africa is divided into several subregional integration agreements that have historically competed rather than cooperated with each other.
"Therefore, their convergence and compatibility with the AfCFTA will be a great challenge," South African economist Nomahlubi Jakuja said.
Non-tariff barriers can also lead to trade costs significantly higher than the tariffs themselves, which will be eliminated in 90 percent of the products.
Before the pandemic, the UN Economic Commission for Africa (UNECA) estimated that the AfCFTA could increase intraregional trade by over 50 percent by 2022, which would translate into higher growth, more foreign investment, and more industrialization.