In a move that may boost the economies of an entire continent, 26 African nations have entered into a new free trade agreement. Called the Tripartite Free Trade Agreement (TFTA), the historic agreement was finalized on July 19, and it may signal a turning point in the history and economic strength of the entire African continent.
The unprecedented agreement creates, in the words of Robert Mugabe, the President of Zimbabwe, a "borderless continent." It calls for the formation of three regional economic communities unified under a free trade umbrella agreement that establishes preferential tariffs designed to smooth the import and export of goods and personnel across the continent.
According to the International Business Times, Egyptian president Abdel Fattah al-Sisi said of the agreement, "We have told the world today...of our desire to adopt practices that are necessary to increase trade among ourselves. We will do whatever is possible to activate this agreement."
The three regional economic communities are called the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), and Southern African Development Community (SADC). These areas have a combined population of more than 625 million people, which equates to more than half of Africa's total population. These regions also create a combined gross domestic product (GDP) of over US$1 trillion.
According to a study by the Institute of Development Studies, the enlarged free trade area should generate an additional US$3.3billion per year for the aggregated African economy. Other benefits should include better, more unified policy coordination across the continent. This will be especially important for Africa's burgeoning industrial development and infrastructure construction.
While the TFTA is just the first step on a more unified African economic unit, the ultimate goal will be total liberalization of tariff lines, complete unification of all African nations in this or similar agreements, and ultimately a unified governing body. Obviously, these goals remain quite a ways in the distance.
While the deal is not a complete salve for the many differences that remain across the various nations on the African continent, World Bank president Jim Yong Kim noted in an interview that with the launch of the TFTA, "Africa has made it clear that it’s open for business." Similarly, the press release put together by the delegates to the TFTA negotiations, and signed by the 26 heads of sates for the agreement's member nations stated, "The establishment of TFTA will bolster intraregional trade by creating a wider market that would increase investment flow...and ensure regional infrastructure development."