Cabinet approves resolution on African Continental Free Trade Area

Mozambique’s government approved on Tuesday the resolution on Mozambique’s Tariff Offer for the Implementation of the Agreement creating the African Continental Free Trade Area (AfCFTA) and the national strategy for its implementation. The decision was taken by the cabinet, which met today in Maputo for its 24th Ordinary Session, according to a final communiqué that explains that the two resolutions will allow Mozambique to “access the AfCFTA Adjustment Fund”.

The fund “aims to assist States Parties implement the AfCFTA agreement, to limit possible negative impacts that may result from the implementation of the agreement,” the communiqué said. It will also allow Mozambique to start using the Pan-African Payment and Settlement System (PAPSS), “which will be made available jointly” by the African Export-Import Bank (Afreximbank) and the AfCFTA Secretariat, “to be used by African companies in intra-African commercial transactions”.

He added that Mozambique will “be part of the Guided Intra-African Trade Initiative for Goods”, which “aims to create real opportunities in Africa through economic operators from countries that have already submitted their tariff offers and are carrying out commercial transactions”, in this case in value chains such as ceramic tiles, batteries, vegetables, avocados, flowers, pharmaceuticals, palm oil, tea, rubber and air conditioning components. The secretary general of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, said in Nassau on June 13 that despite the progress made, it would take time to fully implement intra-African trade.

“We did something that was a vision, and now it’s becoming a reality. What we are doing is establishing an integrated market, which has been a long-standing vision of African leaders,” said Wamkele Mene, speaking at the Annual Meetings of the African Export-Import Bank (AAM2024) and the 3rd Afro-Caribbean Trade and Investment Forum (ACTIF2024). In his speech, Mene emphasised the significant progress already made but warned of the importance of the political will of African leaders.

“We are on the right track in terms of building the legal basis that positions the continent to be a common market. The second important aspect is political will and commitment,” he said. Launched in 2018 and approved a year later, the African free trade agreement came into force at the beginning of 2021 and covers a market with more than 1.3 billion consumers.

The African Union estimates that its barrier-free realisation could increase trade growth by at least 53% and potentially double intra-African trade, lifting 30 million Africans out of extreme poverty and increasing the incomes of almost 68 million others. According to the World Bank, the continent’s Gross Domestic Product (GDP) could grow by $450 billion (around €420 billion) by 2035. The treaty eliminates customs duties on 97% of goods traded between African countries, liberalises trade in services, and improves regulatory and trade infrastructures.

Intra-African exports represent around 16% of African countries’ foreign trade, compared to 55% for Asia, 49% for North America and 63% for the European Union (EU). Despite this, 47 of the 54 members of the African Union have ratified the agreement, committing themselves to eliminating trade barriers and strengthening economic integration. Seven countries – Benin, Liberia, Libya, Madagascar, Somalia, South Sudan and Sudan – have yet to ratify it and Eritrea still doesn’t agree with the creation of the AfCFTA.