The African Development Bank Group has signed a US$4.8 million institutional support grant to the African Union (AU) for the implementation of the African Continental Free Trade Area (AfCFTA).
The grant, approved by the Group’s Board of Directors on 01 April 2019, forms part of a series of interventions by the Bank in its lead role to accelerate implementation of the Free Trade Agreement, seen as a major force for integrating the 55-nation continent and transforming its economy.
Albert Muchanga, AU’s Commissioner for Trade and Industry, initialed for the continental body, and Obed Andoh Mensah, representing the Bank’s Director of the Industrial and Trade Development Department (PITD), signed on behalf of the Bank, signaling the start-up of implementation.
African leaders meeting in Niamey, Niger in early July launched the implementation phase of the free trade area agreement established in March 2018 after it became operational at the end of May this year. Currently, 54 states have signed the deal and are set to begin formal trading next July.
“The AfCFTA is going to work and we are confident that by the 1st of July next year, all the 55 countries would have been state parties – meaning, they would have signed and ratified the agreement and intra-African will start,” Mr Muchanga said and urged countries to use this period to complete the parliamentary processes.
Mr Muchanga commended the Bank’s strong and consistent support to ensure smooth implementation of the Agreement, saying the grant would be used judiciously for the rollout of various protocols relating to the structure and mandate of the AfCFTA secretariat.
The AU currently has an interim secretariat, tasked to provide the organizational structure for the permanent administrative body, its work programme and related issues including its budget. The Niamey summit announced the siting of the AfCFTA secretariat in Accra, Ghana.
The Continental Free Trade deal has the potential to create the largest free-trade area in the world– uniting 55 African countries with a combined gross domestic product of more than US$2.5 trillion. It is a major force for continental integration and expansion of intra African trade, currently estimated at around 16 percent.
The trade agreement is expected to expand intra-African trade by up to US$35 billion per year, ease movement of goods, services and people across the continent’s borders and cut imports by US$10 billion, while boosting agriculture and industrial exports by seven percent and five percent respectively.
In his remarks, Andoh Mensah stressed that the deal would help stabilise African countries, allow small and medium sized enterprises to flourish, promote industrialization and lift millions out of poverty.