The African Continental Free Trade Area (AfCFTA) has agreed to allow the trading of 850 new products pending approval by the heads of state of the African Union. 

Trading of the products will commence under AfCFTA’s Rule of Origin protocol. 

Rules of origin are the criteria needed to determine the national origin of a product. Their importance is derived from the fact that duties and restrictions in several cases depend on the source of imports.

Before the identification of the 850 new products, AfCFTA had already agreed on 3,800, accounting for 88% of the number of targeted products to be traded among member countries on the continent.

Ebrahim Patel, South Africa’s trade minister and chair of the Council of Ministers responsible for trade among African Union member states, described this as a breakthrough.

“In 2019, when African heads of states met, we had already done considerable work,” Patel said at an AfCFTA media briefing Sunday for the 8th Meeting of the Council of Ministers.

“At the time, we had agreed on over 3,800 products for which there were also origins. But there were still a number of products that had not been agreed on.

“So over the last two years, the negotiators, the ministers have been meeting frequently,” he said.

Patel said the eighth meeting of ministers had concluded with a package that has 88% more products on the tariff books across the continent for which they have agreed on the rules of origin.

“In other words, we have now defined for each of them what constitutes the minimum African content for their products to be traded between countries on the continent on the basis of preferences, which is a breakthrough.

“I am happy to say that this two-year period of work that we had undertaken in 2020 and 2021 identified more than 850 additional products for which rules of origin have been agreed. This package now goes to the heads of states, and if they endorse it, the package becomes the basis for trade to commence.”

Wamkele Mene, secretary-general of the Secretariat of the African Continental Free Trade Area, said a new payment system, the Pan African Payments and Settlements Platform, has been launched to help member states trade using a single currency.

This, he said, will deal with the challenges of using a third currency to trade.

“You will know that on the 13th of January, here in Accra, we launched the Pan African Payments and Settlements Platform, which will enable us to now start trading among ourselves as African countries using a local currency rather than a third currency.

“We have 42 currencies in Africa. The cost of currency convertibility according to our studies is in excess of $5 billion a year, and this is not only the monetary cost but also the cost of a lack of competitiveness, constraints in terms of being competitive, access to affordable currency exchange facilities and lack of affordability of small-medium enterprises who want to trade across borders, across regions,” he said.

“So now with the Pan African Payments and Settlements Platform, which was recognized by the ministers yesterday as a tool of implementation, we will now be able to, as Africans, trade using local currency. When you switch to the platform, you will be able to trade with somebody in Kenya. You will trade using Ghanaian cedi. They will trade using Kenyan shillings.”

AfCFTA is a free trade area founded in 2018, with trade commencing as of Jan. 1, 2021.

It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.

The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization (WTO).

Ghana’s capital Accra serves as the secretariat of AfCFTA and the headquarters was commissioned and handed over to the African Union by Ghana’s President Nana Akufo-Addo on Aug. 17, 2020 in Accra.

The agreement was brokered by the African Union and was signed by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018.

It initially required members to remove tariffs from 90% of goods, allowing free access to commodities, goods and services across the continent.

The United Nations Economic Commission for Africa (UNECA) had estimated that the agreement would boost intra-African trade by 52% by 2022. The proposal was set to come into force 30 days after ratification by 22 of the signatory states.

On April 2, 2019, Gambia became the 22nd state to ratify the agreement, and on April 29 the Sahrawi Arab Democratic Republic made the 22nd deposit of instruments of ratification. The agreement went into force on May 30 and entered its operational phase following a summit on July 7, 2019.