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  The African Continental Free Trade Area (AfCFTA) is a trade agreement between African nations that aims to increase trade and investment among member countries. The agreement was officially launched on July 7, 2019, in Niamey, Niger, and as of January 2021, 54 of the 55 African Union (AU) member states have signed the agreement, with Eritrea being the only exception.
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The AfCFTA aims to create a single market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African Customs Union. The agreement also aims to enhance competitiveness at the industry and enterprise level by exploiting opportunities for scale production, continent yet access and better reallocation of resources. The AfCFTA has the potential to significantly increase trade and investment in Africa, which would in turn boost economic growth and development. The agreement is expected to increase intra-African trade by 52.3% by eliminating tariffs on 90% of goods. This would make it easier for African businesses to export their goods and services to other countries on the continent, thereby increasing their competitiveness in the global market. The AfCFTA also aims to address the challenges of inequality and poverty in Africa by promoting industrialization and value addition to raw materials. The agreement is expected to create jobs and improve living standards for people across the continent. In conclusion, the AfCFTA is expected to promote regional integration, which would help to reduce conflicts and promote peace and security in Africa. The agreement is also expected to strengthen cooperation among African countries on economic, social and political matters.

How Will Nigerian Startups Benefit?

Many observers, especially economic experts, developmental theorists, investors as well as businesspeople, have pointed out how the economy of Africa will benefit from the AfCTA initiative, especially the continent’s budding tech ecosystem. The benefits include:

  • Increased access to new markets

The AfCFTA will open up new markets for African tech companies, allowing them to expand their customer base and increase revenue.

  • Improved cross-border trade

The agreement will make it easier for tech companies to trade across borders, reducing the costs and barriers associated with doing business in multiple countries.
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  • Facilitation of technology transfer

The AfCFTA will encourage the transfer of technology and knowledge among African countries, helping to boost innovation and productivity in the tech ecosystem.

  • Boosting investment

The agreement will attract more foreign investment in the African tech sector, providing companies with access to capital and resources to grow and develop.

  • Promotion of local content

The AfCFTA will promote the development and use of locally-made technology, helping to create jobs and support the growth of the African tech ecosystem.

  • Fostering innovation

The agreement will create new opportunities for innovation, as companies seek to develop new products and services to meet the demands of the larger continental market.

  • Encouraging entrepreneurship

The AfCFTA will provide a supportive environment for entrepreneurs, helping to create new businesses and spur economic growth in the tech sector.

  • Creating new jobs

The agreement will create new jobs in the tech sector, helping to reduce unemployment and improve living standards across the continent.
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  • Improving digital infrastructure

The AfCFTA will support the development of digital infrastructure across the continent, helping to bridge the digital divide and promote access to technology. This will be a plus for startups

  • Enhancing competitiveness

The agreement will enhance the competitiveness of the African tech ecosystem by promoting scale production, continental market access, and better reallocation of resources. Featured Image Source: Leadership News
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This article was first published on 23rd January 2023

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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