Egypt together with another 44 African countries recently signed the African Continental Free-Trade Area Agreement (AFCFTA), which is a crucial step towards creating an African common market.
African economic integration is expected to contribute to promoting sustainable development and increasing economic growth rates for all African economies in accordance with the Africa Vision 2063 programme endorsed by the African Union (AU).
The signing came during the African Union Summit that was held in the Rwandan capital Kigali in March. The decision to establish the AFCFTA was taken during the 18th African Summit held in Addis Ababa in 2012.
The agreement, which should be ratified by the parliaments of the 44 countries within 120 days, is expected to be activated in 2019.
Egypt played an important role in the success of the negotiations relating to the agreement, including through constructive cooperation with the African countries concerned as well as providing the needed expertise to finalise the agreement.
AFCFTA will eventually bring together 55 African countries with a combined population of more than one billion people and a combined GDP of more than $4 trillion. It aims at increasing intra-African trade flows to $22 billion by 2022, almost 52 per cent higher than their level in 2012, in addition to boosting investment opportunities.
AFCFTA aims at establishing a single continental market for commodities and services, with free movement of businessmen, technicians and specialists to facilitate the transfer of technical knowledge and trade-related services in a number of areas.
This will contribute to achieving the goals of sustainable development and enhance industrial and infrastructure development in the African countries.
AFCFTA also paves the way for the creation of the African Continental Customs Union and greater economic integration. This will encourage coordination between the African countries in removing tariff and non-tariff barriers to trade in goods and services as well as capital.
It is expected that such integration will take place in five phases, including the Free Trade Area (FTA), the Customs Union (CU), the Common Market, the Monetary Union, and eventually full economic integration in which all the countries act as a single country with unified economic policies.
AFCFTA is also one of the main priorities for boosting the Egyptian economy due to the positive economic consequences that should be attained through a continental market for goods and services in Africa and the free movement of capital widening opportunities for investment.
Among the positive economic consequences are expanding intra-African trade through the better coordination of trade liberalisation and economic policies, enhancing the competitiveness of exporting industries, increasing productive capacity, and consolidating the efficiency of supply chains through enlarging production scales and the reallocation of resources.
The establishment of the FTA among the African countries will also improve their positions in the international market by taking advantage of economies of scale, helping them to access continental and international markets and widening investment opportunities that will assist in diminishing rates of unemployment.
The writer is a lecturer at the Faculty of Economics and Political Science at Cairo University.
*This story was first published in Al-Ahram Weekly