AfCFTA: The WEF highlights the benefits of the world’s largest free trade zone
The African Continental Free Trade Area (AfCFTA), which came into effect on 1 January 2021, has been much in the news. The World Economic Forum (WEF) has published an article entitled ‘6 reasons why Africa's new free trade area is a global game changer’
WEF describes AfCFTA as the world’s largest free trade area in terms of member countries (55), one that connects 1.3 billion people in a continent that has a combined GDP of US$3.4 trillion. AfCFTA’s potential lies in the fact that presently only 17% of Africa’s exports are intra-continental, compared to 59% for Asia and 68% for Europe. AfCFTA aims to eliminate 90% of tariffs and create a single market with free movement of goods.
WEF describes the benefits of AfCFTA as follows:
- By speeding up wage growth it will lift 30 million people out of poverty by 2035.
- It will produce varied positive economic outcomes - diversifying exports, accelerating growth, integrating Africa into the global economy, increasing foreign direct investment, and increasing employment opportunities and incomes.
- African women will benefit. Presently 70% of informal cross-border traders in Africa are women. Tariff reductions will enable these women to operate through formal channels, bringing them better protection.
- Trade integrity will be enhanced. WEF defines trade integrity as international trade transactions that are ‘legitimate, transparent and properly priced.’
- AfCFTA presents a short-term opportunity for countries to ‘build back better’ and cushion the effects of COVID-19.
- AfCFTA will set an example for the world. As much of the world turns away from global cooperation, a trade agreement that will deepen ties across a continent will inspire.
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