The first commercial deal under an Africa-wide free trade zone will take place on Jan. 1 as outstanding talks are set to move online, the African Union said.
While the African Continental Free Trade Area entered into force legally last year, transactions that were due to start on July 1 were delayed as the virus set back negotiations on the protocol for trade in goods, including tariff concessions.
The outstanding negotiations will be finalized through a new African Virtual Trade-Diplomacy Platform that is being developed as a public-private partnership between the African Union Commission and more than 20 African multinational companies, the African Union said in a statement published on its website. The trade deal is being led by the continental body.
Set to be fully operational by 2030, it could be the world’s biggest free trade zone by area, with a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion. Fifty-four of the 55 nations recognized by the African Union have signed to join the area -- Eritrea is the exception -- while 28 have ratified the agreement.
Africa lags other regions in terms of internal trade, with intra-continental commerce accounting for just 15% of the total, compared with 58% in Asia and more than 70% in Europe. The agreement aims to change that by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union.