Kigali African heads of state and government gathered in Rwanda's capital Kigali on Tuesday to sign a free trade agreement that would result in the largest free trade area in terms of participating countries since the formation of the World Trade Organization (WTO) in 1995.
Leaders are poised to approve the African Continental Free Trade Area (CFTA), a deal that will unite the 55 member states of the African Union (AU) in tariff-free trade, CNBC reported.
The agreement is touted by the AU as encompassing a market of 1.2 billion people, and a gross domestic product of $2.5 trillion. It is hoped that the deal will encourage Africa's trade to diversify away from its traditional commodity exports outside of the continent, the volatile prices of which have hurt the economies of many countries.
"Less than 20 percent of Africa's trade is internal," Rwandan President Paul Kagame, also currently chairperson of the AU, said in a speech on Tuesday. "Increasing intra-African trade, however, does not mean doing less business with the rest of the world."
But, the deal has its critics. It was announced over the weekend that Nigerian President Muhammadu Buhari would not be attending the summit, despite his federal cabinet last week approving the deal. "This is to allow more time for input from Nigerian stakeholders," said a statement from Nigeria's Foreign Ministry.
The agreement is opposed by the Nigeria Labor Congress, an umbrella organization for trade unions in the continent's most populous nation, which is also considered by some metrics to be sub-Saharan Africa's largest economy. Ugandan President Yoweri Museveni also called off his visit to Rwanda at the last minute, although it remains unclear as to why.
Should the agreement be signed, second phase talks are expected to begin later this year. These will focus on investment, competition and intellectual property rights. According to a study published by the United Nations last month, the deal will lead to long-term welfare gains of approximately $16.1 billion, after a calculated $4.1 billion in tariff revenue losses. But, the report did warn that benefits and costs might not be distributed evenly across the African continent.
Source: International Islamic News Agency