May 12, 2019

Free trade comes to Africa

Felix Salmon, author of Edge

The largest free trade area in the world, both by area and by population, will formally come into effect on May 30, now that Gambia has become the 22nd country to ratify the Africa Continental Free Trade Area, or AfCFTA.

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Adapted from World Economic Forum; Map: Axios Visuals

The big picture: Africa has 1.2 billion people — more than double the EU or NAFTA. Almost every African country has signed the treaty; the one big exception is Nigeria. AfCFTA came together in record time, after first being proposed by Rwandan President Paul Kagame in March 2018. As a result, a lot of the implementation details are a bit fuzzy.

  • "What’s been really impressive is how quickly they’ve agreed to and then ratified the deal," says Grant Harris, the CEO of Harris Africa Partners. "Now the real world begins in terms of how issues are worked through in practice."

Reality check: Africa's trade problems won't be solved overnight. The continent needs some $50 billion per year in infrastructure investment, and truckers are still likely to spend hours or days idling at international borders.

  • By the numbers: The World Bank's Paul Brenton calculated in 2012 that passenger traffic between Brazzaville and Kinshasa — on opposite sides of the Congo River — was just 20% of the amount of traffic between East and West Berlin before the wall came down.

Why it matters: Almost every African country exports more outside the continent than it does within it. African supply chains are extremely weak, and the amount of prosperity that could be generated by strengthening them is enormous. AfCFTA, on its own, is not sufficient to create a booming market in intra-African trade. Still, it's an extremely important milestone on the way there.

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