The African Continental Free Trade Area (AfCFTA) is now set to be launched in January next year.
The entry into force of AfCFTA has been delayed due to the Covid-19 pandemic.
AfCFTA should help address the current challenge of small fragmented markets in Africa by creating a single continental market which will lead to economies of scale and so boost trade within Africa.
One estimate is that intra African trade will increase by as much as US$35 billion per year or 52 per cent by 2022.
AfCFTA should add value to Africa's prodigious natural resources and promote economic diversification and industrialisation, in addition to facilitating higher levels of foreign direct investment (FDI) in Africa.
A new World Bank report has found that, if implemented fully, the trade pact could boost regional income by 7% or $450 billion and lift 30 million people out of extreme poverty by 2035.
Africa represents a market of 1.2 billion people and a combined GDP of US$3.4 trillion. Moreover this market is forecast to more than double to 2.5 billion people by 2050.
Africa already boasts over 400 African companies that earn annual revenues of US$1 billion or more.
AfCFTA will open up market access opportunities for SMEs in Africa on preferential trade terms and the continent will become a very attractive destination for Foreign Direct Investment because of its market size and growth prospects , with the potential for joint ventures and enhanced local content. Once fully implemented, the AfCFTA is expected to cover all 55 African countries and so will represent the largest free trade bloc anywhere in the world in terms of geography.
Within Africa, the largest market by some margin is Nigeria with a population of 206 million and growing at 3.2% a year. At that rate, there will be an estimated 402 million people in Nigeria in 2050. This highlights the central importance of Nigeria as a market for local and foreign companies notwithstanding the current challenges facing the Nigerian economy, the most serious of which is the continued dependence on oil which accounts for around 80% of Nigeria’s total exports.