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Africa’s Free-Trade Future

With the launch of the African Union's long-awaited Continental Free Trade Area this month, African leaders have an opportunity to set their countries on a path toward social and economic transformation. But they will first need to come together to ensure that the new framework's power is not merely symbolic.

LUSAKA – When African leaders launch the massive Continental Free Trade Area (CFTA) on March 21, 2018, at a summit in Kigali, Rwanda, their top priority should be to avoid rolling out something that is either hollow or redundant. The CFTA – one of 12 flagship programs under the African Union’s (AU) Agenda 2063 framework – could double intra-African trade and bring enormous benefits to the continent. But much will depend on the arrangement’s final shape.

One positive sign is that the CFTA will include trade in services, which already contribute more than 50% of African countries’ GDPs, on average. A growing body of research suggests that services will provide new social- and economic-development pathways for Africa. In their recent book The Unexplored Potential of Trade in Services in Africa, Nora Dihel and Arti Grover Goswani of the World Bank marshal data to show that services have the potential to provide much-needed employment and incomes for ordinary people across the continent.

Service industries such as communications, transportation, banking, insurance, energy, education, and health are key drivers of development, while both tourism and construction currently have high growth potential. Moreover, for many young professionals, services are the only way to earn a living. And with the emergence of entrepreneurial universities – where course work and dissertations produce business propositions rather than just paper degrees – vibrant services markets will become more necessary than ever.