The success of the African Continental Free Trade Area (AfCFTA) agreement will significantly rest on the ability of Africa’s private sector to produce goods for the market, the President of the African Export-Import Bank (Afreximbank), has said.
Dr Benedict Oramah said there is need for the private sector to take advantage of the opportunities that the AfCFTA presents, including through developing viable manufacturing hubs.
He noted that there is also an opportunity whereby countries can access raw materials and other intermediate goods from fellow African countries for further processing and export at competitive rates.
Afreximbank is working actively with the African Union Commission to ensure the realisation of the goals of the AfCFTA, he said, adding that the Bank was willing to help African businesses with “information, market intelligence and financing”, which would enable them to take advantage of the opportunities that AfCFTA presents.
The AfCFTA has potential to increase a country’s trade with the rest of Africa by at least fivefold.
The agreement was signed by 44 countries in March this year and nations are expected to ratify the deal in their respective parliaments.
The agreement could drive up intra-Africa trade by about 52 per cent, according to estimates by United Nations Economic Commission for Africa.
Intra-Africa trade is currently at about 14 per cent.
AfCFTA implementation is also expected to lead to the creation of more jobs for the continent’s growing population by enabling growth of manufacturing sector and reducing reliance on extractive exports.
Extractive exports on which Africa’s trade is currently based are less labour intensive than the manufactures and agricultural goods that will benefit most from.
Small and medium enterprises are among the main potential beneficiaries.
SMEs account for around 80 per cent of the continent’s businesses.
Most of these businesses have been said to face hardships penetrating more advanced markets, but could be better positioned to tap into regional export destinations through the agreement, experts say.