AU Adopts 2023 as Year of AfCFTA
The 36th African Union Summit (#AU) convened in Addis Ababa from the 18 to 19 February 2023. One of the key resolutions was to adopt 2023 as the Year of the #AfCFTA with a view towards the “Acceleration of the African Continental Free Trade Area Implementation.”
The target is to eliminate 90% of tariffs by 2035 across the continent which is expected to generate an extra USD 450 billion of income. The AfCFTA seeks to promote local job creation and sustainable development with a special attention to SME, including youth and women empowerment.
Since February 2022, eight countries from five regions of the continent, namely, Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia, are participating in the AfCFTA Guided Trade Initiative (GTI) which is a pilot to facilitate trade among African states which have met the minimum requirements under the AfCFTA.
The GTI support matchmaking of products for export and import between African countries. Products earmarked in this round include: ceramic tiles, batteries, coffee, tea, sugar, processed meat, corn starch, pasta, glucose syrup, dried fruits, sisal fiber, amongst others. By providing preferential access to boost intra-Africa trade, the AfCFTA aims to promote Local Value Addition (#LVA) and the upgrade of the value chain.
In 2023, the GTI will enlarge its cope to cover Trade in Services in five identified priority sectors, notably:
- Tourism,
- Transport,
- Business services,
- Telecommunications services, and
- Financial services
Year-long activities are planned to enhance trade partnerships among African states, the Regional Economic Communities (REC), AU Institutions, the private sector, development partners and other stakeholders.
Currently, 44 countries have ratified the AfCFTA instruments while 54 out of 55 have signed the agreement.
In conjunction with the AfCFTA, the Pan African Payment System (PAPSS) is being implemented to enable efficient and secure financial flow across African borders. As at June 2022, the PAPSS network consisted of 8 central banks, 28 commercial banks and 6 payment switches.
By the end of 2023, the PAPSS is expected to expand to all five REC of Africa. The target is to sign up all central banks in Africa by end of 2024. With 42 major currencies in use across Africa, the PAPSS is expected to significantly reduce the costs of currency convertibility and save businesses an estimated USD 5 billion annually.