Has Africa’s Free Trade Area agreement been overhyped?
April 14, 2021 7692 views 319 comments 3 minutes reading timeThere is much talk about the African Continental Free Trade Area (AfCFTA) recently launched by the African Union. The agreement seeks to tap into regional integration and create the world’s largest trading block. It will see the reduction of tariffs, remove trade barriers and reshape the economies of participating countries.
But despite the numerous promises made, has it been overhyped?
If successfully implemented, the agreement is expected to make Africa’s economies more competitive and mark a significant step towards eradicating poverty.
The trade area is earmarked to connect approximately 55 countries with the capacity to generate a gross domestic product estimated at US$ 3.4 trillion. A recent World Bank report highlighted that the agreement will lead to a 10% increase in the wages of skilled and non-skilled workers. This projected growth is expected to lift an estimated 68 million people out of poverty.
Dr Vera Songwe, the Executive Secretary for the United Nations Economic Commission for Africa, emphasizes the need to diversify economies for Africa’s prosperity.
Despite the lucrative growth opportunities of the AfCFTA, there are several challenges that might hinder its implementation.
First of all, while Eritrea is the only country in Africa yet to sign the agreement, only 35 countries have ratified it. There is also the issue of trade bottlenecks that need to be dealt with such as laws on rules of origin and poor infrastructure.
According to Ottilia Anna Maunganidze, the Head of Special Projects at the Institute for Security Studies, infrastructure is critical for the success of inter-Africa trade
Some analysts state that the initial teething issues should be overlooked if Africa is to reap the benefits of the trade agreement.
We asked Dr Mukhisa Kituyi, former Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), how he sees the future of the trade agreement and some of the potential issues that might lie ahead in the early stages of trading.
Considering the benefits of the AfCFTA and the bottlenecks identified, we sought to understand whether it is a far-fetched dream that has been overhyped or a timely agreement that can be achieved by working on the existing issues.
Carl Manlan, the Chief Operating Officer of the Ecobank Foundation, believes that the agreement is timely and worth pursuing.
This sentiment is echoed by Louise Mushikiwabo, Secretary-General of the Organisation internationale de la Francophonie
Has Africa’s free-trade area agreement been overhyped? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts!
Image by Paul Kagame via flickr
Image by Paul Kagame via flickr