Africa Current Affairs

44 African countries sign agreement to establish African Continental Free Trade Area

The 44 African countries from total 55 members of African Union (AU) have signed agreement to create African Continental Free Trade Area (AfCFTA), one of the world’s largest free trade blocs. The agreement was signed at a summit held in Kigali, Rwanda.

The signed AfCFTA agreement contains legal framework for free trade area. It will come into force after it is ratified by individual countries through their respective domestic processes. 10 countries including Nigeria, Africa’s largest economy and most populous country have refused to sign the agreement.

African Continental Free Trade Area (AfCFTA)

AfCFTA will bring together 1.2 billion people with combined gross domestic product (GDP) of more than $2 trillion from entire continent of Africa comprising 55 countries. The continental trade bloc aims to remove barriers to trade, like tariffs and import quotas, allowing the free flow of goods and services between its members. It also seeks to liberalise services and aims to tackle so-called non-tariff barriers which hamper trade between African countries, such as long delays at borders. It will help in creating single continental market for goods and services and boost trade between African countries. It will boost commerce, growth and employment. The free trade area may also will free movement of people and even have single currency in future. It will also make Africa more competitive outwardly. Once AfCFTA becomes reality, it will be largest free-trade area in terms of participating countries since the formation of the World Trade Organization (WTO).

Background

African heads of government agreed to establish a continental free trade area in 2012 and started negotiations in 2015 to boost intra-Africa trade. Intra-African trade is relatively limited and it is made up only 10.2% of continent’s total trade in 2010. Within Africa, 43% goods traded are manufactured products. Between 2010 and 2015, fuels represented more than half of Africa’s exports to non-African countries, while manufactured goods made up only 18% of exports to rest of the world.

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Fact Box: 52nd Annual General Meeting of African Development Bank (AfDB)

The 52nd Annual General Meeting of African Development Bank (AfDB) is being held at Gandhinagar in Gujarat from May 22-26, 2017. This is for the first time that this meeting is being held in India. This meeting is expected to be attended by some 4500 delegates including the finance ministers and central bank governors of AfDBs members and non-member countries.

About African Development Bank (AfDB)

African Development Bank Group (AfDB) also known as Banque Africaine de Developpment (BAD) was founded in 1964 with a mission to fight poverty and improve living conditions of the people of African continent by promoting investment in government and private capital in development projects. The bank is made of three entities viz. African Development Bank, African Development Fund, and Nigeria Trust Fund. Its headquarters are at Abidjan, Côte d’Ivoire (Ivory Coast). The motto of the bank is “Building today, a better Africa tomorrow” and currently, it has total 78 members including India. India had joined this bank in 1983. Its unit currency (for accounting purpose) is XUA under the ISO 4217 standard currency code.

India and other Non-African Members

India is a non-African member country for this bank. Some other non-African member countries include US, Japan, Germany, Canada, France, China etc. Nigeria is the largest country in terms of voting powers at the African Development Bank, followed by United States.

Significance of the meet

So far, the annual conferences of the bank have held within African continent only. For the first time in 2017, the bank is holding its first annual conference outside Africa at Gandhinagar. This event is to be inaugurated by Prime Minister Narendra Modi.  This meet is seen as a logical follow up to the India Africa Forum summit which was held in 2015 in Delhi.

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