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19 May 2016

Continental Free Trade Area - Building the Next Africa

The African continent has a combined population of more than one (1) billion people in its fifty-four (54) countries and its combined gross domestic product (GDP) is more than USD 1.2 trillion, however, the continent records low continental trade which stands at a total of 14% according to United Nations Economic Commission for Africa.  The low intra-Africa trade still remains a pressing issue for the development of the continent and that is why the African Union, in its twenty-fifth Summit held in South Africa in June 2015, has made it its main objective to tackle this problem by pushing forward the creation of a continental free trade area (CFTA) by 2017.
Through its objectives, CFTA intends to improve and boost trade across the continent by creating a single continental market for goods and services and to expand the intra-African trade by improving harmonisation and coordination of trade liberalisation.
Brief Overview of CFTA in Intra-African Trade Monetary Value and Prospect
In their computable general equilibrium (CGE) analysis, Cheong, Jansen and Peters estimate that compared with the baseline, the regional FTAs will stimulate the intra-African trade by 35.7 per cent (or $23.6 billion) and the CFTA will increase the trade by 52.3 per cent (or $34.6 billion) in 2022 and therefore increasing exchange within the continent in all main sectors: industrial sector will rise by 53.3 per cent, agricultural and food products trade by 53.1 per cent and the service trade will increase by 31.9 per cent. The CFTA also has the potential to decrease the imports from outside the continent by USD 10 billion.