At the start of this year the largest free trade agreement in the world came into effect, with the goal of connecting the entire African continent.
Right now, only about 16 to 18% of African trade is with other countries in Africa – the vast bulk goes or comes from overseas. There are a lot of historical reasons for this (ref: the New Imperialism conquest of Africa by European powers in the late 19th and early 20th century), but one significant barrier is the morass of tariffs and restrictions on inter-African trade. Persistent readers may remember the Mules of Melilla that I wrote about this time last year, detailing the peculiar border controls between Morocco and Spanish-controlled Melilla and Ceuta. Well, those kinds of restrictions are common and confounding throughout the continent.
The 20th and 21st centuries have seen a strong push to unite continents in various ways: politically, administratively, and economically. The South American continental union fell apart two years ago, the European Union is going strong (although it just lost a member), but the African Union is easily the largest, both in terms of the number of countries and the number of people under its aegis.
The African Union is nowhere near as closely integrated as the European Union, but it has an assembly, a parliament, a secretariat, and has been working hard on breaking down the barriers between its member countries. And on January 1 of this year, inter-African tariffs were on the chopping block. The African Continental Free Trade Agreement came into effect.
Now, this agreement doesn’t mean that all the tariffs are gone. In fact, it is expected to take years or decades for all of the member countries to remove them – and many member countries have not yet ratified the agreement. But the intent is there, the free trade area has officially begun, and 54 of the 55 countries of the African Union have signed on.
(54 of 55 – who’s the holdout? Well, Eritrea was at war with Ethiopia when the agreement was signed and so was a bit distracted, but they’ve since made peace and Eritrea is keen to join in when they can.)
It is hoped that increased trade within Africa will facilitate economic growth and reduce the continent’s reliance on international trade. I guess we’ll have to wait to see how well it works.
[Thanks to Zach Weinersmith for drawing my attention to this topic.]