Nigeria—the continent’s largest economy and most populous country—will finally sign the African Continental Free Trade Area (AfCFTA) agreement which aims to boost intra-Africa trade and create the world’s largest trading bloc.
While enough countries have signed up for the historic free trade deal to become operational (it surpassed the 22-nation threshold when Gambia signed on in April), the erstwhile absence of Nigeria has been a major concern for the African Union (AU). Nigeria will sign the agreement at an AU summit in Niger next week, president Buhari office confirmed via tweet late on Tuesday (Jul 2).
The economic play with the AfCFTA INTRA-is simple: African countries look inward and make it easier to trade with each other by removing current barriers to increased trade on the continent, such as current high tariffs. Having access to a larger market of around 1.2 billion people will potentially trigger industrialization and manufacturing across the continent and, in turn, create vast employment opportunities on a continent home to the world’s fastest-growing labor force. If signatory countries follow through with policies that spur local productivity, the free trade argument could boost intra-African trade by 52% by 2022, estimates the United Nations Economic Commission for Africa (UNECA).
While it’s one of the last countries to sign on, Nigeria could yet be the biggest beneficiary of AfCFTA, says Landry Signé, a Brookings Institution fellow. “The unique continental market access combined with the increasing focus on industrialization as a catalyst for growth and priority of the government to shift away from over-reliance on volatile primary commodity exports will contribute to boosting Nigeria’s manufacturing sector and exports,” he says.
But, as is true for every other African country, signatures will not prove to be enough. To fully benefit, Nigeria will also have to “increase its global competitiveness” as well as improve on the ease of doing business to attract investment, Signé adds.
The AfCFTA also signals a renewed push for more integration across Africa in a bid to ease movement and trade. The African Union has also launched a single air transport market to boost connectivity and cut travel costs across the continent. And recognizing that freer intra-Africa movement is not dependent on cheaper flights alone, it has also launched an “African Union passport” which, while still unavailable, could potentially resolve problems Africans face when traveling within the continent.