By Ahmed Mheta
The African continent is home to approximately 1.2 billion people and growing everyday. The challenge for most African governments is maintaining sustainable development and growth. One of the best ways to achieving sustainable development and accelerated economic growth is the implementation of free trade as a vehicle to attaining economic integration throughout the continent. Free trade will increase the continent’s combined GDP which currently stands at above US$2.5 trillion.
African leaders agreed to meet in Rwanda allowing 44 nations to sign the African Continental Free Trade Area agreement. The agreement is the biggest trade deal since the establishment of the World Trade Organization. Like most impactful establishments, authorities still face challenges in getting the largest economies to sign the agreement. South Africa and Nigeria, two of the continent’s largest economies did not sign the trade deal stating that they need more time to consult with trade unions and businesses about potential risks. Some of the concerns the two giant economies have with the agreement are fear of displacement of communities and some industries closing due to competition from other regional businesses.
Benefits of the Trade Agreement
Despite potential risks, we should take into account the benefits that the agreement will offer to the continent. The deal will accelerate economic growth, improve sustainable development, allow customers to access a wide variety of goods from other nations at lower prices, promote cultural exchange and advancement of infrastructural projects. The benefits associated with the signing of the trade agreement will lead to creation of jobs and a single continental market for goods and services.
If all nations come together and sign the agreement, the continent’s combined GDP will most likely double or go way above the US$6 trillion mark.The gross domestic product(GDP) increases will largely be attributed to the increase of intra-trade on the continent and free movement of goods without high tariffs. For example, the continental trade deal will remove tariffs on 90 percent of goods allowing easy access to products while saving money.
The agreement will also encourage the free movement of people as well as the full implementation of a single continental passport. Once all nations have agreed to sign and participate, the establishment of a single continental currency is possible. The deal will encourage a culture of regional peace and understanding.
Despite the potential success of the agreement, leaders still have to address the challenges the continent will face. Solutions need to be formulated and adapted for each problem executives will encounter while trying to establish the deal successfully.
One of the main challenges leaders will face while implementing the agreement include the complex task of fostering cooperation among a multitude of national and regional economic actors with trade interests that will diverge at times. Another challenge officials have to deal with is the fear that enterprises will go out of business and the displacement of some communities. Officials believe the trade deal will encourage economic migrants to permanently settle in nations that have bigger economies posing a challenge to governments that are not prepared to deal with the potential influx of migrants.
Despite the challenges the continent will encounter, viable solutions should be implemented to facilitate the success of the trade agreement. The African Union has to persuade remaining countries to sign the deal by promoting a solution based approach to any challenge. For example, the union needs to provide enough resources to ensure the success of the agreement. Leaders need to establish a secretariat to coordinate the goals of the agreement and work closely with members of the union. Funding for infrastructure is important to ensure goods are transported efficiently and timely. Rail lines, ports, airports and roads must be further advanced so that goods are easily transported in and out of nations.
Leaders can set up a dispute resolution committee to solve arguments and differences that may derail progress. Creation of social policies that will assist citizens that might lose jobs due to increased competition from other regional businesses is important to ensure communities are intact. Governments will need to develop entrepreneurship programs that boost local businesses in a way that matches other regional enterprises. When continental trade begins at a large scale, the pricing of goods should be set and adjusted to meet the standards of other regional partners.
Many of you will agree with me that the benefits of establishing the trade agreement with full participation from all African nations, outweigh the challenges associated with achieving success. Future African generations as well as the whole world will benefit from the African Continental Free Trade Area agreement. Leaders and lawmakers should do everything in their power to make this game changing economic move.