AfCFTA

The African Continental Free Trade Area (AfCFTA) is a free trade area founded in 2018 with trade having commenced on 1st January 2021.

AfCFTA is an initiative of the African Union-and its flagship project of Agenda 2063-to accelerate intra-African trade and boost Africa’s trading position in the global market.

AfCFTA requires member countries to remove tariffs from 90% of goods and to allow free access to goods and services across the continent

AfCFTA is the largest free-trade area in the world in terms of participating countries, with 41 of the 55 Member States of the African continent having ratified the AfCFTA agreement as of January 2022.

Eventually, AfCFTA will cover a market of 1.2 billion people and a gross domestic product (GDP) of USD 2.5 trillion across all 55 member states of the African Union. 

The United Nations Economic Commission for Africa (UNECA) estimates that AfCFTA has the potential both to boost intra-African trade by 52.3% by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.

UNECA explains that with average tariffs of 6.1%, businesses currently face higher tariffs when they export within Africa than when they export outside it. AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and cater to and benefit from the growing African market.

The general objectives of the AfCFTA are to:

-Create a single market for goods, services, facilitated by movement of persons to deepen the economic integration of the African continent;

-Create a liberalized market for goods and services through successive rounds of negotiations;

-Contribute to the movement of capital and natural persons and facilitate investments;

-Lay the foundation for the establishment of a Continental Customs Union at a later stage;

-Promote and attain sustainable and inclusive socio-economic development, gender equality, and structural transformation;

-Enhance the competitiveness of the participating economies within the continent and the global market;

-Promote industrial development through diversification and regional value chain development, agricultural development, and food security; and

-Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

Tanzania and AfCFTA

On 9th September 2021, the Parliament of Tanzania has ratified the Agreement Establishing the African Continental Free Trade Area, effectively joining this free market.

This implies that Tanzania consents to reduce, and ultimately eliminate, tariffs on 90% of products traded under the AfCFTA. 

However, Tanzanian stakeholders are said to be not yet fully aware of the challenges created by AfCFTA in terms of competitiveness, nor understand how it will affect them.

This is why the government of Tanzania has started a dialogue with other member states that have ratified AfCFTA on how to implement AfCFTA.

Last Updated: 15th March 2022