Trade is a powerful engine for economic growth and development. However, Africa’s role in the global trade market has fundamentally been providing raw commodities in exchange for manufactured goods, thereby capturing a minimal 3% of the global share of trade. In addition intra-Africa trade is relatively low at levels of not more than 15% and this can change if Africa effectively addresses supply side constraints and weak productive capacities, infrastructural bottlenecks, trade information networks, access to finance for businesses, facilitation of trade in services and free movement of people for cross border trade.
The African Continental Free Trade Area (AfCFTA) is a flagship project of Agenda 2063 and refers to a geographic zone where goods and services move among member states of the African Union (AU) with no restrictions. The AfCFTA aims to boost intra-African trade by providing a comprehensive and mutually beneficial trade agreement among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy. Globally, countries are concluding Mega-Regional Trade Agreements (MRTAs), thus reshaping and changing the global trading landscape in the process. The establishment of the AfCFTA will allow Africa to strengthen its position vis-à-vis the rest of the world, speak with one voice and act in unison on all continental and international trade issues.
The AfCFTA will create a wider market of more than 1.3billion people a combined GDP of US$ 3.4 Trillion and by the year 2035, the combined GDP of the AfCFTA market, is estimated to be close to US$ 7 Trillion. That means that there are opportunities for Small and Medium Enterprises (SMEs) and young entrepreneurs to export across regions of the African continent, and to take advantage of this vast market.. This will induce investments, result in pooling of African resources to enhance structural transformation and the development of regional value chains. Benefits of the AfCFTA include:-
• Boosting employment opportunities;
• Increased food security through reduction of trade barriers on agricultural products;
• Increased competitiveness of African industrial products through harnessing the economies of scale of a continental wide market;
• Increased rate of diversification and transformation of Africa’s economy and the continent’s ability to supply its import needs from its own resources;
• Better allocation of resources, improved competition and reduced price differentials;
• Growth of intra-industry trade through regional value chains and development of geographically based specialisation;
• Reduced vulnerability of countries to external trade shocks by reducing the trade balance deficits of African Countries;
• Enhanced participation of Africa in Global trade and reduced dependency on aid and external borrowing.
27 янв 2019
