AFRICA FREE TRADE IMPLIES TECH DEVELOPMENT

Last week the surprise came from the agreement reached by the European Union and Mercosur to create a free trade area. After 20 years of negotiations, the agreement resolved in a few months. This week the surprise has come from Africa, where 55 countries have signed a free trade agreement. The free trade area will cover a population of about 1.2 billion consumers, with expectations of doubling that number in 30 years. The 55 countries of the African Union (AU) have decided to make the African Continental Free Trade Area (AfCTA) a reality. The AU has designed five instruments of government for this economic union; the Rules of Origin, the online negotiating forum, the monitoring and elimination of non-tariff barriers, a digital payments system, and the African Trade Observatory. With that five government instrument, a vast free trade area will accomplish. The AU has marked its development expectations through a series of continental agreements, as the Abuja Treaty, signed in 1991 aimed at establishing an African Economic Community. The AfCTA is not a usual agreement due to the double legislation on free trade areas that exists within the African continent. In Africa, there are already four free trade zones in which AfCTA signatories countries operate. The Economic Community of West African States (ECOWAS) is a 17 countries economic community aimed to reach economic cooperation and integration. ECOWAS members have an agreement to adopt a common currency in 2020, the ECO. The East African Community (EAC) is a six members agreement with prospectives custom union, common markets, monetary union, and political federation projects. Other African organizations are the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA). The AU has the hard task of aligning all African free trade areas in a single line of action to meet the objectives of the AU´s 2063 agenda.

The balance will be complicated to achieve, due to the disparity of goods produced by the different AfCTA countries, and due to the interests that third parties have on the continent. Nigeria is a regional economic power due to its energy resources but depends almost exclusively on that. Nigeria owns most of the foreign debt of its bordering countries due to the trade imbalance with its neighbors. That is why Nigeria has concerns to withdraw the tariffs of the main national economy just to obtain innumerable low-value products in return. South Africa would be the country that would have more to win in this trade agreement because it is the most industrialized country and the one with the most added value production. The five AfCTA ´s governance instruments have the complicated task of balancing a continent with disparate economies, both in goods production and economic volume. At the moment, inter-Africa trade gets only 16% of the trade among AfCTA countries. Bilateral trade agreements with other non-African partners are greater than among AfCTA countries. However, AfCTA is an agreement that has great prospective benefits for companies from countries with high industrial capacities. Africa is a continent that needs to be fully developed, from its transport infrastructures or civil engineering to its telecommunications. The 2063 agenda is one of the most ambitious agendas to develop around the world, so there are already companies that have taken positions in the African development market.

Ghana is going to be the base of AfCTA's secretariat, and likewise, Ghana is the country where Google has established its Artificial Intelligence Laboratory. Similarly, Google is the company that is developing the Africa internet network through optical fiber cables; the project is named Equiano and aims to connect the countries between Portugal and South Africa by the year 2021. Microsoft has a plan for Africa and seeks to open Development Centers in Nairobi, Lagos, Kenya, and Nigeria before the end of 2019. The American company foresees to invest more than 100 million dollars in software development in Africa.  By establishing development centers in Africa, foreign companies will be suitable to joint the AfCTA. Africa is digitizing at high speeds; in fact, the demand for the use of Internet data is slowing down due to the lack of infrastructure. It is expected an increase in smartphones connections from 315 million in 2015, to 636 in 2022, and this doubles USA expectations. The AU 2063 agenda wants a network of high-speed trains, virtual universities, electricity networks throughout the continent. All these development measures will be an interesting incentive for companies from developed countries to turn their eyes to Africa, and like Google or Microsoft many companies will invest in training and development centers in the continent, due to the commercial facilities that It will provide AfCTA. Africa is probably the continent that receives the most technological investments from all over the world in the coming decades

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