The African Continental Free Trade Area1 (AFCFTA) which is has of most African Cou6ntries2, aims to create a place where African States (Countries) can promote and improve their goods and services trading. The AFCFTA Agreement is the document that sets out the countries' objectives and commitments.

In this article, we will consider (i) the history of the AFCFTA, (ii) the effects of the AFCFTA on the Nigerian Economy; (iii) some of the benefits and opportunities of AFCFTA to Nigeria; and (iv) some recommendations that may help improve some of the challenges that the AFCFTA may face.


In 1963 the Independent States3 Of Africa founded the Organization of African Union (OAU) to promote cooperation between all African States. In 1980, the action plan was to boost intra-African Trade. In 1991, the African Economic Community (AFC) created a Treaty that promoted the development of accessible trade areas, customs unions, an African Central Bank (ACB), and an African common currency union (ACCU).4

The African Union (AU) succeeded the OAU in 2002 to accelerate the "economic integration of the Continent.5"and to "coordinate and harmonise policies between the existing and the future Regional Economic Communities.

The AU Heads of State initiated the idea of establishing an African Continental Free Trade Area (AFCFTA) with the vision of becoming the largest free trade area in the world by

  1. It is a group of like-minded countries coming together by an agreement to help reduce trade barriers such as tariffs and quotas to encourage inter-regional trading among themselves (within Africa Continent).
  2. Algeria, Angola, Benin, Burkina Faso, Central Africa Republic, Cameroon, Cape Verde, Chad, Comoros, Congo, Cote d’Ivoire, Democratic Republic of Congo, Djibouti, Egypt, Equatorial Guinea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Kenya, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Niger, Rwanda. The Saharawi Republic, São Tomé and Principe, Senegal, Seychelles, Somalia, South Sudan, Sudan, Swaziland, Togo, Tunisia, Uganda, Zimbabwe, Botswana, Burundi, Eritrea, Lesotho, Namibia, Nigeria, South Africa, Tanzania, and Zambia.
  3. Algeria, Tunisia, Morocco, Egypt, Libya, Djibouti, Mauritania, Somalia, and Sudan.
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  5. To attain greater unity and solidarity, defend the sovereignty, territorial integrity, and independence of Member States, and accelerate the political and socio-economic integration of the African Continent.

having a combined Gross Domestic Product (GDP) of more than $3.4 trillion. On 21 March 2018, 54 of the 55 African countries signed the AFCFTA agreement draft. The Agreement came into force on 30 May 2019 and entered its operational phase on 7 July 20196, and it officially commenced on 1 January 2021.


State Parties to the AFCFTA agreement are committed to eliminating tariffs on most goods and services over 5, 10, or 13 years. The number of years depends on the country's level of development, the nature of the products, and other methods or deciding factors are captured by the long-term objectives of the Agreement, which are:-

  • creating a single and liberalised market where Africa States can trade in one market without strict regulations;
  • reducing barriers to capital and labour to facilitate investments7;
  • developing regional infrastructures8; and establishing a Continental Customs Union (CCU).

The scope of the Agreement covers the following: -

  • trade in goods9;
  • trade in services10;
  •  investment11; and
  • rules and procedures on dispute settlement, including a range of provisions to facilitate trade, reduce transaction costs, and provide exceptions, flexibilities, and safeguards for vulnerable groups and countries in challenging circumstances.

The Agreement is divided into 2 phases:

Phase 1 includes: -

  •  Trade in Goods. Trade-in Goods are goods that add or subtract from the stock materials of a country either as import or export. The Agreement is focused on creating a Single African Market (SAM) by implementing the Protocol on Trade in Goods and Competition.
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    2. This will enable individuals and corporate institutions to access funds/facilities to make profitable investments.
    3. agreeing to this Agreement by state members would facilitate the involvement of each state member in its contribution to the implementation of the Agreement.
    4. which has to do solely with Trade in goods such as products and commodities.
    5. which involved the rendition and exchange of services between African states.
    6. which involves making regulations that favour and encourage interstate investment.
  • Trade in Services which are the sale and delivery of intangible products such as those relating to technology12. The Progressive Liberalization of Services (PLS), one of the initiatives, is a commitment by Member States to negotiate incentives, benefits, and regulations that would encourage and boost Trade in services. To accomplish the objective of the PLS, State Parties are enjoined to offer their commitments within the Service Sectors through Schedules of Specific Commitments and by developing cross-cutting sectoral regulatory frameworks.
  • Dispute Settlement Mechanism (DSM) focuses on amicable, transparent, and soft resolution of disputes between State Parties.13.
  • Customs and Trade Facilitation (C&TF) is for the effective implementation of the agreed tariffs, enforcement of agreed rules, rules of origin, proper management of borders, simplification and harmonisation of Customs Laws and Procedures, supervision of transhipment, and Customs Cooperation.

Phase 2 includes the:

  • Intellectual Property Rights (IPR) is the Promotion and Protection of IPR. These are central to achieving the AFCFTA objectives, particularly regarding Trade in services.
  • Investment protocols will be designated to promote, facilitate, and protect the investment that fosters sustainable development of State Parties while safeguarding the rights of States to regulate. The Protocol is expected to establish a transparent and sound continental legal framework on investment, considering the interest of State Parties and investors.
  • Competition Policy:The AFCFTA Competition Protocol negotiations are ongoing. It encourages companies to offer consumers goods and services on the most favourable terms.14.
  • Digital Trade (DT)is an integral part of free Trade and critical to boosting intra-African Trade.15. DT is the Trade in goods and services done digitally/electronically. This allows free and little or no interruption in trade transactions and encourages trading between African States/Parties State.
  • Women and Youth in Tradeis the inclusiveness of interventions/organisations/projects that support young Africans, Women, and Small and Medium Enterprises (SMEs), as well as integrating Informal cross-border traders into the formal economy by implementing the simplified trade regime.
  1. Technology has created resourceful means where services can be exchanged between the African States.
  2. The key institution of the DSM is the Dispute Settlement Body, the Adjudication Panels, and the Appellate Body for second-tier review.
  3. 14It promotes efficiency and innovation and reduces prices within the AFCFTA market.
  4. In February 2020, the AU Assembly decided to include DT within the AFCFTA

The establishment of the AFCFTA marks a key milestone, and the size of the trade area presents promising sustainable economic development and growth that may reach all Sectors and a vast number of participants.

The benefits of AFCFTA are:

  • Economic Boost and Trade Diversity:The United Nations Economic Commission for Africa (UNECA) estimates that AFCFTA will boost intra-African Trade by 52.3% once import duties and non-tariff barriers are eliminated.16 This is because the trade initiative will (i) diversify intra-African Trade (as it would encourage more industrial goods as opposed to extractive goods and natural resources); (ii) boost Africa’s economic output to around $29 trillion by 205017: (iii) bring Africa’s transformation from an exporter of agricultural commodities and raw materials to a supplier of finished manufactured goods; (iv) lead to sustained economic growth; and (v) job creation18.
  • Single market: Creating a single demand for goods and services increases trading among African nations. This single continental market is expected to deepen continental integration, increase productivity19, and avail substantial gender-balanced opportunities20.
  • Eliminating Tariffs among State Parties trading and application of preferential tariffs to imports from other State Parties21.
  • Growing Small and Medium-Sized Businesses, removing import duties will encourage small and medium businesses.22.
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  2. The current intra-African Trade stands at around 18% of total Trade compared to 59% in Asia and 69% in Europe
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  4. The active involvement of State Parties in AFCFTA will boost and facilitate its Economy, particularly as the AFCFTA encourages trade diversity (raw materials production and manufacturing of finished goods), the effectiveness of trade diversity would also strengthen the country’s currency as against the USSD.
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  6. With average tariffs of 6.1%, businesses currently face higher taxes when they export within Africa than on the Continent.
  7. Small and medium-sized businesses currently make up 80% of companies in Africa.
  • Contributing to Sustainable Development Goals (SDG),including SDGs 8, 9 and 17.
  • Encouraging Industrialisation,the successful implementation of AFCFTA means there is more potential for Africa’s manufacturing sector to double capacity and revenue generation.
  • Protecting Women Traders.According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Casual trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.

Nigeria signed the AFCFTA Agreement on 7 July 2019, and a Presidential National Action Committee on AFCFTA (NAC-AFCFTA) was constituted and inaugurated to proffer viable strategies for implementing AFCFTA. The NAC-AFCFTA was mandated to coordinate all AFCFTA readiness interventions and monitor the Agreement's implementation as it works toward its full achievement. Consequently, the NAC-AFCFTA set up 14 Workstreams to drive the implementation of the Agreement and engage stakeholders across all sectors of the Economy. These Workstreams are broadly categorised into four areas discussed below23:-

  • Export Market Development Workstream, which cuts across both Trade in goods and services24.
  • Non-Tariff Barriers Elimination Workstream.25This Workstream deals with all Non-Tariff Barriers (NTBs) that restrict or increase the cost of importation and exportation of goods and services.
  • Manufacturing Workstream26.
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  2. is a platform for policymakers and exporters to deliberate on issues about the export market and proffer solutions to the challenges faced by exporters,Such as high transportation costs, high transaction costs at the port, and foreign exchange policy.
  3. Trade Enablement, Power Services, Border Rules of Origin, Trade Facilitation, Policies, Regulations, and Laws
  4. This Workstream has the mandate of ensuring that Nigeria’s domestic manufacturers have the requirements to participate in theAFCFTA Agreement. The Central Bank of Nigeria (CBN) has enhanced the manufacturing sector's growth through various initiatives26. The Bank has financed large-scale production and processing of cassava, rice, maise, sesame seed, and livestock, among others, and the expansion of these activities to the level of exports.
  • Financial Services and Investment Mobilization Workstream.27This Workstream was created as a forum for financial sector players to discuss issues relating to the Agreement's implementation.

The African Continental Free Trade Area (AFCFTA) is the creation by Africans for Africans to promote intra-regional Trade and harness opportunities in their states and within the Continent. The AFCFTA presents tremendous potential and opportunities for all State Parties, and utilising these potentials and prospects will likely expand the Africa Trade Area and ensure its global recognition.

The success of AFCFTA is on the State Parties who must: -

  • show commitment and guarantee that AFCFTA Agreement is domesticated.
  • Get involved in collaboration programs and platforms that exchange ideas, knowledge, skills, innovations, and creativity that would foster the implementation of AFCFTA.
  • support capacity building of Trade Laws, Agreements, and requirements for entry under AFCFTA and create awareness of market access opportunities.
  • encourage investments.
  • encourage regional value chain development. End products of goods
  • must be exported within the Africa Region. Hence, it boosts State Parties’ competitiveness among themselves and in international space. Regional trade participation would help African states improve infrastructure, transportation, communications, research, and general development.
  • strive to build stronger Business Membership Organizations (BMOs) and Chambers of Commerce. These organisations are established to add value to their members by organising capacity-building programs and providing the correct information for developing the organisations, tiny and medium-sized businesses.
  • focus on utilising established institutions and organisations to improve the nation's trading system.
  1. Trade in Services, Communications and Digital Services, Travel, Tourism, Creative Industries, and Transport and Business Services.
  1. African Continental Free Trade Area Agreement 2012.
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The African Continental Free Trade Area1 (AFCFTA) which is has of most African Countries2, aims to create a place where African States (Countries) can promote and improve their goods and services trading. The AFCFTA Agreement is the document that sets out the countries’ objectives and commitments.