In May 2019, African leaders launched the African Continental Trade Area (AfCFTA) with the intention of uniting 1.5 billion people and ushering in a new development era within the continent. A free trade area is an area formed by reciprocal multilateral agreements,
where two or more nations agree to limit or eliminate all import tariffs and duties between them. AfCFTA presents opportunities for African countries to help each other grow economically through regional co— operation and integration as previously attempted through regional economic communities (RECs).
The integration anticipated under the AfCFTA aims to unlock manufacturing potential and facilitate industrialisation in Africa while driving economic growth and creating employment. According to the United Nations Conference on Trade and Development (UNCTAD), free trade zones serve as a focus for infrastructure development which is considered necessary for export— oriented activities. Infrastructure contributes to economic growth by reducing the cost of production and transport of goods and services, increasing productivity, creating indirect positive externalities (such as the availability of utilities) and improving quality of life.
Birguid forecasts that the AfCFTA will propel the African economy towards the easy and quick facilitation of people and goods. However, more needs to be done from a policy development standpoint. The AU should learn more from European Union or the United States Mexico Canada Trade Area on how to successfully roll out regional integration initiatives. The failures and successes of the EU and USMCA can be leveraged to develop a winning formula, specific to the strengths and needs of the African economy.
Our research uncovers the trends and future potential regional integration in Africa with the aim of enabling market participants and investors to identify and understand the opportunities that may arise from its implementation.