Africa’s largest free-trade zone is to be created, covering 26 countries in an area from Cape Town in the south, to Cairo in the north.
The deal, signed in Egypt, is intended to ease the movement of goods across member countries which represent more than half the continent’s GDP.
Since the end of colonial rule, governments have been discussing ways to boost intra-African trade.
The poor state of roads, railways and airlines have made it difficult.
Three existing trade blocs – the Southern African Development Community (Sadc); the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa) – are to to be united into a single new zone.
The pact – known as the The Tripartite Free Trade Area (TFTA) – will then be officially unveiled at the upcoming summit of the African Union this weekend in South Africa.
BBC Africa Business Report’s Lerato Mbele says the idea behind it is to remove trade barriers on most goods, making them cheaper, and stimulating $1tn (£648bn) worth of economic activity across the region of more than 600 million people.
However, concluding the deal in Egypt will merely be the first step and it will need to be approved by each country’s parliament, before the wheels are set in motion, she says.
It is hoped that this will happen by 2017.
Analysts says countries within a free-trade zone agree to reduce or do away with certain trade barriers within that area, but still pursue their own trade policies when it comes to outside countries.
Kenyan academic Calestous Juma said the move was “extremely exciting” for the continent as, once implemented, trade within Africa would increase to 30per cent from 12 per cent.