44 of 55 countries have signed the African Free Trade Agreement, in an effort to promote efficient trade in the region.
With a combined gross domestic product of about
US$2.5 trillion and 1.2 billion people, Africa currently trades more with continents or countries outside of Africa than with fellow African countries.
The next step in the process of implementing the Continental FTA will be for the signatories to ratify the agreement and then implement the provisions of the agreement. Critical areas to consider include rules of origin to qualify for preferential taxes on imports from member countries as well as agreements of which physical barriers to trade are eliminated gradually.
The ultimate aim of the African Union is to become a political federation with one currency and one president across the whole continent.
EY’s Global Tax Alert provides additional details on this exciting development.