The African Continental Free Trade Area (AfCFTA) has the potential to transform the African continent by connecting 54 countries with a combined population of 1.3 billion and GDP of $3.4tn.
However, in order to reap the benefits of this landmark trade agreement, non-tariff barriers and hurdles affecting cross-border goods crossings must be addressed, according to a new report by the World Bank Group.
The report, titled “Can African trade integration be a game changer?”, highlights the challenges that the AfCFTA faces and stresses the need for African businesses to see the opportunities it presents.
The report suggests that the agreement has the potential to bring significant economic and social benefits in the form of faster economic growth, higher incomes, and less poverty.
To achieve these benefits, the World Bank emphasises the need to tackle non-tariff barriers and hurdles affecting cross-border crossings of goods. It also stresses the importance of reducing barriers to trade in services, as each country has its own regulations covering industries such as logistics and transport, financial services, tourism, and communications, Investors King reports.
The report suggests that the signing of the agreement is just the first step and that it will take much more to unlock its potential gains in trade, investment, and jobs. African nations will need to support the AfCFTA Permanent Secretariat, which is charged with administering the agreement, and domestic laws and regulations will need to be harmonised with the agreement’s protocols on investment, intellectual property rights, competition, and digital trade.
Stakeholders must encourage progressive liberalisation of cross-border trade and investment policies in line with AfCFTA protocols to establish the groundwork for regional value chains in Africa. The report also advises member states to strengthen cross-border trade and investment in services by facilitating trade in digital services, removing FDI restrictions, and liberalising the movement of workers.
In addition to ministries of trade, other government agencies in each country should also become familiar with the AfCFTA and learn the key role they may be called to play in its implementation on the ground. The report suggests that the African private sector, including SMEs that could benefit from AfCFTA, should become more familiar with the different chapters of the treaty and learn how the topics addressed – such as the liberalisation of trade in services – can be leveraged to boost their businesses.
The World Bank Group’s report highlights the immense potential of the AfCFTA to transform the African continent by promoting trade, investment, and job creation. However, for this potential to be realised, non-tariff barriers and hurdles affecting cross-border goods crossings must be addressed.
African nations must work together with the private sector and civil society to ensure that the promise of the AfCFTA can finally be a game changer for Africa and reap its many benefits for its people.
