What is AfCFTA?
The AfCFTA trade agreement covers trade in goods, trade in services, investment, intellectual property rights and competition policy. The Africa Continental Free Trade Area (AfCFTA) brings the potential and opportunities to simplify customs procedures and drive $292 billion of the $450 billion in potential income gains and will be the largest free trade area in the world measured by the number of countries participating.
The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.
It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures in place.
As per the World Bank Report:
“The African Continental Free Trade Area (AfCFTA) provides a unique opportunity for countries in the region to competitively integrate into the global economy, reduce poverty, and promote inclusion. Although Africa has made substantial progress in recent decades in raising living standards and reducing poverty, increasing trade can provide the impetus for reforms that boost productivity and job creation, and thereby further reduce poverty. AfCFTA can provide this spark. By 2035, we estimate that implementing the agreement would contribute to lifting an additional 30 million people from extreme poverty and 68 million people from moderate poverty. Real income gains from full implementation of the agreement could increase by 7 %, or nearly US$450 billion. As African economies struggle to manage the consequences of COVID-19, AfCFTA can provide an anchor for long-term reform and integration.
AfCFTA would significantly boost African trade, particularly intraregional trade in manufacturing. By 2035, the volume of total exports would increase by almost 29 % relative to business as usual. Intracontinental exports would increase by more than 81 %, while exports to non-African countries would rise by 19 %. This would create new opportunities for African manufacturers and workers.”