When the Ethiopian Parliament ratified the African Continental Free Trade Area (AfCFTA) last March, the decades-old dream of integrating the continent economically moved one big step forward.
On April 2, the small West African nation of Gambia became the 22nd nation to ratify the free trade pact, the minimum threshold needed to approve the deal among the 55 members of the African Union (AU).
The ratifying members will then need to deposit their instruments of ratification with the AU. So far, 15 members have already done so, and the AfCFTA will enter into force, 30 days after the required number of ratifications have been deposited with the AU.
Speaking to Xinhua, Costantinos Bt. Costantinos, who served as an economic advisor to the AU and the United Nations Economic Commission for Africa (UN-ECA), said Ethiopia’s industrialization ambition will likely get a boost from the country’s ratification of AfCFTA.
“With Ethiopia engaging in an ambitious industrialization drive, to make the country a light manufacturing hub in Africa by 2020, AfCFTA can make Ethiopian goods easily accessible to fellow African countries,” said Costantinos.
Costantinos said with Ethiopia’s industrial ambitions and that of other African nations constrained by lack of significant regional economic integration, AfCFTA can be one way to promote regional economic integration.
“African nations including Ethiopia can import goods from neighboring countries that are not readily available within their borders, creating strong intra-African trade linkages,” Costantinos told Xinhua.
Already, Ethiopia is undertaking road, rail, energy and air travel infrastructure projects to boost economic integration efforts with neighboring countries.
These include the construction and commissioning of the 756km electrified rail line connecting landlocked Ethiopia to ports in Djibouti, an ongoing road construction project to connect Ethiopia’s capital Addis Ababa to Kenyan capital Nairobi and a 6,450 MW hydro dam Ethiopia is building just 40 kilometers from the Sudanese border.
With Ethiopia being Africa’s second most populous country at nearly 105 million people, only surpassed by Nigeria, as well as being the seat of the African Union (AU), Ethiopia’s AfCFTA ratification was seen as key to persuade reluctant African countries to join the agreement.
While Ethiopia is looking to the immediate future of using AfCFTA to deepen regional economic integration, the AU is aiming for AfCFTA to become a catalyst for larger economic integration in the whole of Africa.
AU Commissioner for Trade and Industry Albert Muchanga recently said the AfCFTA operations will bring continental economic integration dreams into reality.
“With AfCFTA expected to be operational soon, the AU expects member states to start to liberalize trade relations with each other, reduce trade tariff among African countries and come up with mechanism to monitor the application of non-tariff barriers by some member states,” said Muchanga.
With African countries including Ethiopia, Lesotho, Egypt and Nigeria aiming to use the textile and apparel sectors to boost their economies, the AU has already identified priority sectors that will help AfCFTA’s overall goals.
“The textile and apparel sector has the potential to create mass employment opportunities for the continent’s youth and women, promote intra-African trade and integrate Africa into the global economic value chain,” said Muchanga.
He added that private African textile and apparel sector manufacturers should also look to develop joint ventures to increase the capacity of their production lines, thereby boosting economies of scale.
In March 2018, African countries signed an agreement establishing the African Continental Free Trade Area in Kigali, Rwanda.
The AfCFTA, being one of the biggest trade agreements in recent years in the world, aims to create a single market among the countries in the African continent.
According to the AU, the AfCFTA will bring together African countries with a combined population of more than 1 billion people and a combined GDP of more than 3.4 trillion U.S. dollars.