So far, it is true that only five East African countries have submitted their ratification of the AfCFTA. However, what matters is not the number of countries, but the fact that a regional bloc of contiguous countries, representing about three-quarters of regional GDP, is growing. From 1 January 2021, Djibouti, Ethiopia, Kenya, Rwanda and Uganda will all begin with a reduction in their tariffs – starting with a linear reduction to 90% of tariffs – which will result in the abolition of tariffs on intra-regional imports over a five-year period (10 years for countries considered by the United Nations as the “least developed countries”); By the standards of regional trade agreements, this pace of liberalization will be quite rapid. And it couldn`t have come at a better time. As a collective, the continent is embarking on a new economic path. In 2018, African heads of state signed an agreement that would revive the African Continental Free Trade Area (AfCFTA), a revolutionary change in Africa`s regional and international trade. When it gradually comes into force in the coming months and years, AfCFTA will cover a market of more than 1.2 billion people and up to $3 trillion in GDP, with the potential to increase intra-African trade by more than 50%, according to the UN Economic Commission for Africa. According to the World Bank, the agreement could add $76 billion in revenue to the rest of the world. Once completed, AfCFTA will become the largest free trade area in the world since the creation of the World Trade Organization. The reasons for this neglect of these neighbouring markets are quite clear and go beyond the usual considerations of low per capita income. On the one hand, Ethiopia has a fairly protectionist customs policy, with high levels of tariffs in some sectors.
However, members of the East African Community (EAC) such as Kenya (not Ethiopia) currently apply a high external tariff on imports of Ethiopian products, although both countries are members of the Common Market for East and South Africa (COMESA) regional grouping. This is because Ethiopia has not yet joined the comesa and, therefore, relatively high tariffs are still applied to bilateral trade. A similar problem concerns trade between Rwanda and Uganda with the neighbouring Democratic Republic of Congo (DRC) – all members of COMESA, but the Democratic Republic of Congo has not yet joined the free trade agreement. The political momentum towards africa-wide free trade has strengthened. In March 2018, more than 40 countries signed the Continental Free Trade Area (AfCFTA) agreement. After its full implementation, AfCFTA is expected to cover all 55 African countries, with a total GDP of about $2.2 trillion. This NDS reviews recent business developments in sub-Saharan Africa and assesses the potential benefits and costs of AfCFTA, as well as the challenges of its successful implementation. In addition to increasing trade flows for both existing and new products, AfCFTA has the potential to generate significant economic benefits for African countries. These benefits include increased returns from improved efficiency and productivity through better allocation of resources, increased cross-border investment flows and technology transfers. In addition to reducing import duties to ensure these benefits, African countries must remove new trade barriers by making their customs procedures more efficient, reducing their significant infrastructure gaps and improving their business climate.