New Africa-wide free trade zone represents $3.4-trillion market

Click to play video: 'African leaders launch $3.4 trillion free-trade zone'
African leaders launch $3.4 trillion free-trade zone
WATCH ABOVE: After four years of talks, African leaders announced an agreement to form a 55-nation trade bloc – Jul 7, 2019

Several African heads of state gathered in Niger’s capital Sunday to launch a continentwide free trade area that represents an estimated market of US$3.4 trillion.

The African Continental Free Trade Area aims to create a single unified market for the continent’s 1.3 billion people and to boost economic development.

READ MORE: Africa shocked by Donald Trump’s ‘shithole countries’ remark

Plans for the free trade zone received a boost last week when Africa’s largest economy, Nigeria, became the 25th country to ratify the trade agreement.

WATCH: Trump praises ‘great relationship’ with Nigerian President during Oval Office meeting

Click to play video: 'Trump praises ‘great relationship’ with Nigerian President during Oval Office meeting'
Trump praises ‘great relationship’ with Nigerian President during Oval Office meeting

The general agreement has been signed by 54 of Africa’s 55 countries, with only Eritrea not signing up.

Story continues below advertisement

The location of the zone’s headquarters and a timeline for the start of trading are expected to be announced at the African Union summit in Niger’s capital.

Financial news and insights delivered to your email every Saturday.

The goal of the new free trade area is to significantly increase trade within Africa. Currently, African countries conduct only 16 per cent of their trade with each other, compared to 65 per cent among European countries, according to the African Union.

Africa already has several smaller regional trading areas, including the East African Community, the Southern African Development Community, the West African Economic Community and the Common Market for Eastern and Southern Africa.

READ MORE: Africans among migrants trekking to Mexican border — in record numbers

Many hurdles remain to creating an effective continent-wide trading area, including a lack of transportation infrastructure and border restrictions.

Another item to be discussed at the African Union summit is security in Niger and the surrounding Sahel region, which has seen a rise in jihadist violence.

The G5-Sahel security group, made up of Chad, Burkina Faso, Mali, Mauritania and Niger, was expected to encourage AU leaders to press the United Nations for more support fighting extremist violence.

Sponsored content