World Bank Says Successful Implementation of Trade Pact Could Increase Africa’s Income by $450 Billion
A recent report by World Bank has revealed that the African Continental Free Trade Area (AfCFTA) agreement will avail African countries the opportunity to boost growth, reduce poverty, widen economic inclusion and increase regional income by 7 percent or $450 billion.
The multilateral financial institution further stated that the successful implementation of the trade pact could cushion the negative effect of the global health pandemic, lead to a surge in wage growth for women and lift over 30 million people out of extreme poverty by 2035.
Given the economic damage caused by Covid-19, the report suggested that AfCFTA’s income gain would likely come from simplified customs procedures, tariff liberalization and reduction in non-tariff barriers. Also, putting in place trade facilitation measures that cut off the red tape, reduce compliance costs for businesses, improve ease of doing business in Africa and broaden the continent’s global supply chains would bolster income gains.
World Bank explained that the AfCFTA agreement would help cushion the negative effects of COVID-19 on Africa’s economy — by supporting regional trade and value chains through the reduction of trade costs. In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries by replacing the patchwork of regional agreements, streamlining border procedures, and prioritizing trade reforms, AfCFTA could help African countries increase their resiliency in the face of future economic shocks.
The World Bank’s Chief Economist for Africa, Albert Zeufack, said, “The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers –women and men, skilled and unskilled—across all countries and sectors, ensuring the agreement’s full benefit.”
“The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” he further stated.
According to the report, the trade pact would reshape markets and economies across the region, leading to the creation of new industries and the expansion of key sectors.
AfCFTA would also significantly boost African trade, particularly intra-regional trade in manufacturing. Intra-continental exports would increase by 81 percent while the increase to non-African countries would be 19 percent.
