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:

  1. By speeding up wage growth it will lift 30 million people out of poverty by 2035.
  2. 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.
  3. 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.
  4. Trade integrity will be enhanced. WEF defines trade integrity as international trade transactions that are ‘legitimate, transparent and properly priced.’
  5. AfCFTA presents a short-term opportunity for countries to ‘build back better’ and cushion the effects of COVID-19.
  6. 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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Date published: 17 February 2021
Author: Spoor & Fisher

Tags: The African Continental Free Trade Area (AfCFTA) The World Economic Forum (WEF)