The United Nations Economic Commission for Africa (ECA) on Wednesday stressed that the African Continental Free Trade Area (AfCFTA) is a positive impetus in Africa’s industrialisation and development drive.
“The AfCFTA is a tool that countries can use to create opportunities for African businesses and through them drive the continent’s industrialisation, economic diversification and development,” said David Luke, Coordinator of the Africa Trade Policy Centre (ATPC) at the ECA on Wednesday.
The AfCFTA, which has been signed by 49 of the 54 African countries and ratified by seven so far, “will reduce trade costs and facilitate business expansion and in the process provide great opportunities for African businesses to gain from, and contribute to Africa’s rapid market growth,” Luke said during a Sessions of the Inter-Governmental Committee of Experts (ICE) of Southern Africa.
The AfCFTA will officially come into force once at least 22 countries have ratified the agreement, potentially making the continent the largest trading bloc in the world.
According to the ECA, Africa is currently facing a changing world trading landscape with many evolving external challenges, in which the AfCFTA could serve as a platform for African trade policy coherence providing Africa with the strengthened voice of 1.2 billion people in future negotiations.
The ECA further stressed that the AfCFTA, if well implemented, would foster a common position among African countries on evolving trade policy issues towards ensuring that individual bilateral arrangements do not unravel the objectives of continental integration.
Luke, in this regard, said that in an era of increasingly unreliable aid receipts, and the growing importance of domestic resource mobilisation, the AfCFTA provided a route towards more sustainable government revenues.
“The AfCFTA helps promote the type of trade that produces sustainable growth, creates jobs for Africa’s youth, and establishes opportunities for nurturing Africa’s businesses and entrepreneurs,” he said.
Noting the AfCFTA’s role to pivot Africa’s trade away from extractive exports towards more sustainable and inclusive trade that is less dependent on the fluctuations of commodity prices, Luke further indicated that the pact “will only have a small impact on tariff revenues while helping to restructure African economies to deliver a more sustainable fiscal base.”
“The CFTA presents an opportunity to leverage trade for structural transformation, economic growth and job creation in Africa. This is because intra-African trade, which is promoted by the AfCFTA, has a stronger impact on development than other types of trade,” Luke stressed.
The ECA also advised Africa to fully utilize the opportunities of the AfCFTA, in which each country is recommended to develop an AfCFTA strategy complementary to their broader trade policies and identifies key trade opportunities, current constraints and steps required to take full advantage of the continental African market.
“Such strategies could speak to the African Union’s Boosting Intra-African Trade Action Plan,” the ECA said in a statement on Wednesday.
“African businesses have had their interests piqued, political leadership at the highest level is committed, and the world is watching,” the statement read, adding policymakers must see through momentum with prompt ratification of the AfCFTA.