THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA): What is it? How could it benefit you?
The AfCFTA, introduced on 1 January, is an exciting turning point for the continent, and the flagship project of the African Union's Agenda 2063 to boost intra-African trade. AfCFTA could have combined corporate and consumer spending of $6.7 trillion by 2030, making it the world's largest regional free-trade area. (Source.)
Implementation of the AfCFTA could cause intra-African trade to increase 15 to 25 percent by 2040 (from USD 50 billion to USD 70 billion), according to the United Nations Economic Commission for Africa (read report here)...
Tapping into Africa’s global trade potential
Africa at present records for just 2 percent of world trade. Also, right now, just 17 percent of African exports are intracontinental, contrasted with 68 percent in Europe and 59 percent in Asia. (Source.)
The AfCFTA holds great promise for sustainable development. To realise its transformative potential, it must support decent job creation and reduce inequality. Gender equality is critical to accomplishing these targets. The Secretary General of AfCFTA, Wamkele Mene, stated that the agreement provides an opportunity to close the gender pay gap and give SMEs access to new markets. (Source.)
The benefits of AfCFTA for SMEs and African women
On the continent, small and medium-sized enterprises account for about 90 percent of business. Agribusiness and food creation, representing 55 percent of Africa's workforce, are the biggest employers of women. Also, the growing manufacturing sector will provide new employment opportunities for women. As of now, over 70 percent of cross-border traders occupied with informal trade are women.
There's a need to expand efficiency and close the resource gap between men and women. Doing so can lead to shared prosperity.
“AfCFTA has significant long-term potential. It will tear down barriers across the region and stimulate intra-African trade. This will attract foreign investments into the region attracted by the young demographics and skilled workforce in selected markets. There is also rising consumerism across the region. All this spells good news from an IT investment point as industries will set aside larger IT budgets to scale up faster to take advantage of the growth opportunities. Key digital technologies will also be prioritised”
Adrian Ho, Analyst, Omdia
An introduction to implementing the AfCFTA
This is a continental agreement, but its execution takes place at a national level involving national strategies (source). Gender mainstreaming has helped pinpoint and highlight the ways to advance gender equality and women's economic empowerment. Although the agreement has expanded the economic outcomes of women around the world and works within the framework of the agreement, this progress has not been automatic. (Source.)
One difficulty in the arrangement is that the continent is partitioned into eight free trade areas, each with its own customs unions and rules. It’s necessary to understand the needs and nuances of other African markets so that products and services can be tailored to consumers in different countries. (Source.)
Africa's population of over 1 billion people, as well as a $2.5 trillion market, offer huge potential for anybody interested in cross-border trade and Africa's economic prosperity. As indicated by the World Bank, if completely executed, the agreement could lift 30 million people out of extreme poverty in just 14 years. (Source.)
Blog published by the Africa Tech Festival content team March 2021.