JOHANNESBURG - Several African heads of state gathered in Niger's capital Sunday to launch a continentwide free trade area that represents an estimated market of $3.4 trillion.

The African Continental Free Trade Area aims to create a single unified market for the continent's 1.3 billion people and to boost economic development.

Plans for the free trade zone received a boost last week when Africa's largest economy, Nigeria, became the 25th country to ratify the trade agreement.

The general agreement has been signed by 54 of Africa's 55 countries, with only Eritrea not signing up.

The location of the zone's headquarters and a timeline for the start of trading are expected to be announced at the African Union summit in Niger's capital.

The goal of the new free trade area is to significantly increase trade within Africa. Currently, African countries conduct only 16% of their trade with each other, compared to 65% among European countries, according to the African Union.

Africa already has several smaller regional trading areas, including the East African Community, the Southern African Development Community, the West African Economic Community and the Common Market for Eastern and Southern Africa.

Many hurdles remain to creating an effective continent-wide trading area, including a lack of transportation infrastructure and border restrictions.

Another item to be discussed at the African Union summit is security in Niger and the surrounding Sahel region, which has seen a rise in jihadist violence.

The G5-Sahel security group, made up of Chad, Burkina Faso, Mali, Mauritania and Niger, was expected to encourage AU leaders to press the United Nations for more support fighting extremist violence. </s> Trade within Africa has enormous potential. Whether a new free trade zone on the continent will realize that potential is up to the more than 50 nations participating in it, writes DW’s Claus Stäcker.

A friend of mine from Zimbabwe recently bought a used car. After saving up enough money, he took advantage of a window of stable internet to browse and compare different models online. He checked mileage, trunk size and fuel efficiency, then he finally placed an order — but not in Zimbabwe, nor even in neighboring South Africa, which has an established auto industry and a large used car market. His dream car was in Japan, and the dealer in Yokohama quickly prepared the freight paperwork.

Soon to be the world’s largest free trade zone

A broker made sure the car landed in South Africa’s largest port, Durban, a few weeks later. To save on further shipping costs, my friend took a two-day bus to Durban. After picking up the car, he drove the 1,700 kilometers (1,000 miles) back home. He had to pay a few extra dollars to get the car’s paperwork processed, because it was all in Japanese. He also had to navigate his way through several road checkpoints. Ultimately, he made it home — satisfied that, despite a few hiccups and extra red tape, he had still saved $800 (€713). This is what doing business is like in the South African Development Community (SADC) trade zone.

The SADC is one of five subregions that will form the new African Free Trade Area, known by the cumbersome acronym AfCFTA. The African Union hailed the new trade zone as an historic achievement during an event in Niger on Sunday marking its launch. The bloc was given a boost after Nigeria, which boasts Africa’s largest economy, agreed to sign on.

The AfCFTA, which the African Union says will be the world’s largest free trade area, has now been created — at least on paper. Eritrea is the only country in Africa not participating.

Everyone wants to make rapid social and economic progress in Africa a reality, particularly as refugees leaving the continent continue to endure tragedy in the Sahara and on the Mediterranean Sea. But it remains to be seen whether the AfCFTA can help make that dream a reality.

After all, African trade dreams aren’t new: As early as 1980, the African Union’s predecessor, the Organization for African Unity, agreed on a plan for greater economic integration on the continent. The Lagos Plan of Action, as it was known, not only provided for free trade, but even a common currency. Under Agenda 2063, the African Union’s master plan to speed up development and economic growth, 14 major initiatives have been agreed in addition to free trade — including linking the continent’s 54 national capitals by express trains. But at the moment, many places in Africa lack adequate energy, transportation and telecommunications infrastructure. At the borders, trucks line up for days on end. It is easier to get from Africa to Europe by plane than between many countries on the continent. Meanwhile, governments in Africa mistrust each other so much that they don’t even recognize the African standard passport.

At just shy of 2.5%, Africa’s share of world trade has remained unchanged for the past 20 years. Its continental economic power is less than half the size of Japan’s. Economic growth has recently shrunk to 3% and is still primarily based on foreign trade in oil, gold, diamonds, precious metals and cocoa. Intra-African trade in goods accounts for just 12% of trade volume. This is where the greatest potential lies, because many products would be much more competitive within Africa than on the global trade market. According to the Economic Commission for Africa, however, transport costs on the continent are the highest in the world. Moving a freight container from Tokyo to the Ivorian capital of Abidjan costs roughly €1,300, while intra-African transport from Addis Ababa in Ethiopia to Abidjan costs €4,500 — more than three times as much.

The fact that a Zimbabwean would rather order a used car in Japan than buy a VW, Nissan or BMW built in Africa is proof of the current predicament. African leaders may have celebrated their agreement in Niger, but its the concrete political steps they take that will show whether the AfCFTA is truly historic. </s> Nigerian President Muhammadu Buhari and Benin's President Patrice Talon on Sunday signed a landmark trade agreement ahead of the accord's official launch at the African Union (AU) summit in Niger.

AU commission chairman Moussa Faki dubbed the African Continental Free Trade Area (AfCFTA) deal a "historic" moment.

Read more: Africa's vision for the future – much more than a free trade deal

Fifty-four out of 55 AU member states agreed to the deal in March, with only Eritrea holding out. It took African leaders four years to reach an agreement on the continental free-trade zone, which is expected to usher in a new era of development in Africa.

The AfCFTA is the largest trade bloc since the creation of the World Trade Organization in 1994.

Focus on Africa

"The eyes of the world are turned to Africa," Egyptian President and AU chairman Abdel-Fattah el-Sissi said at the summit's opening ceremony on Sunday.

"AfCFTA will reinforce our negotiating position on the international stage. It will represent an important step," he added.

Read more: Egypt President Abdel-Fattah el-Sissi takes over chair of African Union

'AfCFTA will represent an important step,' says AU chairman el-Sissi (L)

The African free-trade bloc will help boost the continent's long-stymied economy by strengthening interregional trade and supply chains.

The free-trade zone should be operational from July 2020, AU trade and industry commissioner Albert Muchanga told the AFP news agency.

Read more: Can Africa benefit from US-China trade spat?

Major obstacles

Economic experts say the AU still faces significant challenges in implementing the deal. Poor roads and railway lines, violence-hit areas, strict border controls and rampant corruption are some of the obstacles to an effective continental free-trade zone.

AU member countries agreed to eliminate tariffs on most goods, which would boost regional trade by 15-25% in the medium term. It could be doubled in the long term if other issues were dealt with, according to the International Monetary Fund (IMF).

"Reducing tariffs alone is not sufficient," it said.

"It will be important to address those disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented," said Landry Signe, a fellow at the Brookings Institution's Africa Growth Initiative.

The IMF said in a May report that the AfCFTA could be an "economic game changer" for Africa – of a similar kind to the one that boosted growth in Europe and North America.

Amaka Anku, Africa analyst at Eurasia group, said the deal was a positive step but AfCFTA was still "a long way from taking off."

African nations currently trade only about 16% of their goods and services among one another, compared with 65% for the European Union member states.

Watch video 01:26 Share Africa's free trade agreement set to enter final stretch Send Facebook google+ Whatsapp Tumblr linkedin stumble Digg reddit Newsvine Permalink https://p.dw.com/p/3LfRN Africa's free trade agreement set to enter final stretch

shs/ng (AFP, Reuters)

Every evening, DW's editors send out a selection of the day's hard news and quality feature journalism. You can sign up to receive it directly here. </s> (AP) — Several African heads of state have gathered in Niger’s capital to launch a continentwide free trade area.

The African Continental Free Trade Area aims to create a single unified market for the continent’s 1.3 billion people and to boost economic development in an estimated market of $3.4 trillion.

Plans for the free trade zone received a boost last week when Africa’s largest economy, Nigeria, became the 25th country to ratify the trade agreement.

The general agreement has been signed by 54 of Africa’s 55 countries, with only Eritrea not signing up.

The location of the zone’s headquarters and a timeline for the start of trading are expected to be announced at the African Union summit in Niamey on Sunday. </s> related media assets (image or videos) available. Click to see the gallery.

2 related media assets (image or videos) available. Click to see the gallery.

African leaders met on Sunday to launch a continental free-trade zone that if successful would unite 1.3 billion people, create a US$3.4 trillion economic bloc and usher in a new era of development.

NIAMEY: African leaders met on Sunday to launch a continental free-trade zone that if successful would unite 1.3 billion people, create a US$3.4 trillion economic bloc and usher in a new era of development.

After four years of talks, an agreement to form a 55-nation trade bloc was reached in March, paving the way for Sunday's African Union summit in Niger where attendees will unveil which nation will host the trade zone's headquarters, when trading will start and discuss how exactly it will work.

It is hoped that the African Continental Free Trade Area (AfCFTA) - the largest since the creation of the World Trade Organization in 1994 - will help unlock Africa's long-stymied economic potential by boosting intra-regional trade, strengthening supply chains and spreading expertise.

"The eyes of the world are turned to Africa," Egyptian President and African Union Chairman Abdel Fattah al-Sisi said at the summit's opening ceremony.

AfCFTA "will reinforce our negotiating position on the international stage. It will represent an important step."

Africa has much catching up to do: its intra-regional trade accounted for just 17per cent of exports in 2017 versus 59per cent in Asia and 69per cent in Europe, and Africa has missed out on the economic booms that other trade blocs have experienced in recent decades.

Economists say significant challenges remain, including poor road and rail links, large areas of unrest, excessive border bureaucracy and petty corruption that have held back growth and integration.

Members have committed to eliminate tariffs on most goods, which will increase trade in the region by 15-25per cent in the medium term, but this would double if these other issues were dealt with, according to International Monetary Fund (IMF) estimates.

The IMF in a May report described a free-trade zone as a potential "economic game changer" of the kind that has boosted growth in Europe and North America, but it added a note of caution.

"Reducing tariffs alone is not sufficient," it said.

Africa already has an alphabet soup of competing and overlapping trade zones - ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south.

But only the EAC, driven mainly by Kenya, has made significant progress toward a common market in goods and services.

These regional economic communities (REC) will continue to trade among themselves as they do now. The role of AfCFTA is to liberalize trade among those member states that are not currently in the same REC, said Trudi Hartzenberg, director at Tralac, a South Africa-based trade law organization.

The zone's potential clout received a boost on Tuesday when Nigeria, the largest economy in Africa, agreed to sign the agreement at the summit. Benin has also since agreed to join. Fifty-four of the continent's 55 states have signed up, but only 25 have ratified.

One obstacle in negotiations will be the countries' conflicting motives.

For undiversified but relatively developed economies like Nigeria, which relies heavily on oil exports, the benefits of membership will likely be smaller than others, said John Ashbourne, senior emerging markets economist at Capital Economics.

Nigerian officials have expressed concern that the country could be flooded with low-priced goods, confounding efforts to encourage moribund local manufacturing and expand farming.

In contrast, South Africa's manufacturers, which are among the most developed in Africa, could quickly expand outside their usual export markets and into West and North Africa, giving them an advantage over manufacturers from other countries, Ashbourne said.

The presidents of both countries are attending the summit.

The vast difference in countries' economic heft is another complicating factor in negotiations. Nigeria, Egypt and South Africa account for over 50per cent of Africa's cumulative GDP, while its six sovereign island nations represent about 1per cent.

"It will be important to address those disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented," said Landry Signe, a fellow at the Brookings Institution's Africa Growth Initiative.

Regulations governing rules of origin, removal of non-tariff barriers and the development of a payments and settlements system are expected to be unveiled at the summit. </s> African leaders launched a continental free-trade zone on Sunday that if successful would unite 130 crore people, create a $3.4 trillion economic bloc and usher in a new era of development.

After four years of talks, an agreement to form a 55-nation trade bloc was reached in March, paving the way for Sunday's African Union summit in Niger where Ghana was announced as the host of the trade zone's future headquarters and discussions were held on how exactly the bloc will operate.

It is hoped that the African Continental Free Trade Area (AfCFTA) - the largest since the creation of the World Trade Organization in 1994 - will help unlock Africa's long-stymied economic potential by boosting intra-regional trade, strengthening supply chains and spreading expertise.

"The eyes of the world are turned towards Africa," Egyptian President and African Union Chairman Abdel Fattah al-Sisi said at the summit's opening ceremony.

"The success of the AfCFTA will be the real test to achieve the economic growth that will turn our people’s dream of welfare and quality of life into a reality," he said.

Africa has much caught up to do: its intra-regional trade accounted for just 17 percent of exports in 2017 versus 59 percent in Asia and 69 percent in Europe, and Africa has missed out on the economic booms that other trade blocs have experienced in recent decades.

Economists say significant challenges remain, including poor road and rail links, large areas of unrest, excessive border bureaucracy and petty corruption that have held back growth and integration.

Members have committed to eliminating tariffs on most goods, which will increase trade in the region by 15-25 percent in the medium term, but this would more than double if these other issues were dealt with, according to International Monetary Fund (IMF) estimates.

The IMF in a May report described the free-trade zone as a potential "economic game-changer" of the kind that has boosted growth in Europe and North America, but it added a note of caution.

"Reducing tariffs alone is not sufficient," it said.

Africa already has an alphabet soup of competing and overlapping trade zones - ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south.

But only the EAC, driven mainly by Kenya, has made significant progress towards a common market in goods and services.

These regional economic communities (REC) will continue to trade among themselves as they do now. The role of AfCFTA is to liberalise trade among those member states that are not currently in the same REC, said Trudi Hartzenberg, director at Tralac, a South Africa-based trade law organisation.

The zone's potential clout received a boost on Tuesday when Nigeria, the largest economy in Africa, agreed to sign the agreement at the summit. Benin has also since agreed to join. Fifty-four of the continent's 55 states have now signed up, but only about half of these have ratified.

One obstacle in negotiations will be the countries' conflicting motives.

For undiversified but relatively developed economies like Nigeria, which relies heavily on oil exports, the benefits of membership will likely be smaller than others, said John Ashbourne, senior emerging markets economist at Capital Economics.

Nigerian officials have expressed concern that the country could be flooded with low-priced goods, confounding efforts to encourage moribund local manufacturing and expand farming.

In contrast, South Africa's manufacturers, which are among the most developed in Africa, could quickly expand outside their usual export markets and into West and North Africa, giving them an advantage over manufacturers from other countries, Ashbourne said.

The presidents of both countries attended the summit.

The vast difference in countries' economic heft is another complicating factor in negotiations. Nigeria, Egypt and South Africa account for over 50 percent of Africa's cumulative GDP, while its six sovereign island nations represent about 1 percent.

"It will be important to address those disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented," said Landry Signe, a fellow at the Brookings Institution's Africa Growth Initiative.

The summit also saw the launch of a digital payments system for the zone and instruments that will govern rules of origin and tariff concessions, as well as monitor and seek to eliminate non-tariff obstacles to trade, the African Union said. </s> A historic free-trade agreement removing most trade barriers and tariffs has been established between 55 African nations on Sunday in Niger’s capital Niamey, according to Euronews.

Four years of talks between 55 African states culminated in March, including the last-minute inclusion of Benin and Nigeria, to see the establishment of the African Continental Free Trade Area (AfCFTA), the largest trading bloc to be organized since the 1994 formation of the World Trade Organization (WTO).

The signatories of the AfCFTA aspire to advance African economic development by promoting intra-continental free trade and allow for relaxed restrictions on regional trade routes as well as on the movement of labour and capital.

The new economic bloc, although one of many existing trading arrangements on the continent, vows to reduce tariffs by 90 percent and has declared as it’s major focus the export of raw materials and the development of domestic manufacturing as a means of providing incentives for foreign investment .

The International Monetary Fund (IMF) in May described the trading zone as an “economic game changer”, akin to levels of development in Europe and North America.

The inclusion of Benin in the agreement was announced by the Commissioner for Trade and Industry for the African Union.

Nigeria said it join the bloc during the final two-day summit, in which issues of migration and security will be addressed.

“Nigeria is Africa’s biggest economy and most populous country...without Nigeria, the free trade zone would’ve been handicapped,” the president of Niger, Mahamadou Issoufou, said.

Egyptian President and African Union Chairman General Abdel Fattah al-Sisi at the opening ceremony declared: “The eyes of the world are turned to Africa,” while noting that the new trade bloc would reinforce Africa’s negotiating position on the international stage.

Trade within the parameters of the new agreement will begin in July 2020, providing time for signatory states and business communities to adapt to the network and prepare for the functions of an emerging market. </s> Image copyright Getty Images Image caption It is hoped the deal will boost low levels of manufacturing in Africa

The leaders of 44 African countries have signed a deal to create one of the world's largest free trade blocs.

The agreement was signed at a summit in the Rwandan capital, Kigali.

It is hoped the deal will come into force within six months, and increase prosperity for 1.2 billion Africans.

But 10 countries, including Nigeria, have refused to sign the deal, and it will need to be ratified by all the signatories' national parliaments before the bloc becomes a reality.

The African Continental Free Trade Area (CFTA) would remove barriers to trade, like tariffs and import quotas, allowing the free flow of goods and services between its members.

In theory that should boost commerce, growth and employment.

African Union commission head Moussa Faki Mahamat called it a "glorious challenge... which calls for the courage to believe, the courage to dare... the courage to achieve".

He then recognised that to succeed the countries will "need to summon the required political will".

An EU for Africa?

Trade between African countries is relatively low. It accounts for only 10% of all commerce on the continent - compared with 25% in south-east Asia - according to news agency Reuters.

Once the free trade area is established, the ambition is to take further steps that echo the creation of the European Union - like a customs union, a common market, and even a single currency, says Matthew Davies, editor of the BBC's Africa Business Report.

He says many obstacles still have to be overcome.

One is the relatively low level of manufacturing that takes place on a continent where trade often means selling raw materials to the outside world.

Another is getting Africa's largest economy, Nigeria, on board. President Muhammadu Buhari pulled out of the summit, after "certain key stakeholders" - thought to mean trade unions and businesses - complained they had not been consulted.

The African Union said it hoped those countries with reservations would be persuaded to sign at a later date. </s> President Cyril Ramaphosa is joining other African leaders for the inauguration of what is billed as the world’s largest free-trade zone, due to take place on Wednesday, when heads of state in the African Union (AU) sign the African Continental Free Trade Area (AfCFTA) agreement.

Presidents, prime ministers, high-level officials and private-sector stakeholders are all in Rwanda’s capital for the AU’s 10th extraordinary summit of the heads of state and government. The meeting includes a business summit of panel discussions to be held on Tuesday under the theme, "Leveraging the power of business to drive Africa’s integration".

The AfCFTA looks to facilitate the free movement of goods and services as a precursor to the establishment of the African Customs Union. It features a host of measures and institutional frameworks to foster intra-Africa trade through the elimination of tariffs, the harmonisation of customs protocols, and the development of regional supply chains.

"AfCFTA will make Africa one of the largest economies in the world and enhance its capacity to interact on equal terms with other international economic blocs," commented AU Commission chairperson Moussa Faki Mahamat.

The AU’s executive council met over the weekend to finalise the legal and institutional frameworks for the free-trade zone, including a dispute settlement mechanism and protocols pertaining to the liberalisation of 90% of goods in the customs union.

About 46 countries are expected to sign on, comprising 29 presidents and 17 vice-presidents as signatories. Ramaphosa is expected to be in Kigali, along with International Relations and Co-operation Minister Lindiwe Sisulu, the Department of Trade and Industry’s Rob Davies, and his deputy Gratitude Magwanishe.

After Wednesday’s signing, phase two of the negotiations will kick off towards the end of 2018 and will entail thrashing out the details of investment requirements, rules of services trading, competition, and intellectual property rights.

The AfCFTA will be the second flagship project signed this year after the Single Air Transport Market, and forms part of the body’s larger continental economic integration plan enshrined in the AU’s developmental Agenda 2063.

The free-trade zone will span all the AU’s 54 member states, comprising 1.2-billion people and a combined GDP of $3.4-trillion. Intra-Africa trade accounts for a mere 16% of the continent’s total trade, compared to more than 70% of intra-regional trade seen in Europe.

The UN’s Economic Commission for Africa reckons that eliminating import duties alone could see AfCFTA boosting intra-continental trade by 52.3%.

Implementation of AfCFTA will go hand in hand with the union’s action plan on Boosting Intra-Africa Trade (BIAT), which aims to double trade flows by 2022.
African leaders agree on a continent-wide free trade zone, which encompasses all African nations except for Eritrea and Somaliland. The various European territories located in Africa are also excluded. It will be the largest free trade zone since the creation of the World Trade Organization.