• Thursday, April 18, 2024
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AfCFTA failing to open single market for Africa’s 1.7bn people -Report

AfCFTA failing to open single market for Africa’s 1.7bn people -Report

…outline three investment areas

Three years after its launch, the African Continental Free Trade Area (AfCFTA) is yet to open a new era single market for the 1.7 billion people in Africa.

A report by the World Economic Forum (WEF) titled ‘An Action Plan to Accelerate Global Business and Investment in Africa’ highlights that the lack of removal of tariffs and non-tariff barriers to trade is hindering the realisation of potential benefits for African countries.

“The potential benefits to African countries will only be realised if governments eliminate tariff and non-tariff barriers to trade which will incentivize businesses to utilise the agreement,” the report said.

When the AfCFTA was launched in January 2021, businesses across Africa were eager to tap its offerings, which include the creation of a single continental market for goods and services with 1.2 billion people(as of 2021), as well as the free movement of business people and investments.

Read also: Implementing AFCFTA legal frameworks and mechanisms at play in Nigeria

The report, however, noted that WEF is committed to finding solutions that will unlock global prosperity in Africa.

“As the international organisation for public-private cooperation, the World Economic Forum remains committed to finding common solutions that will unlock global prosperity in Africa,” Børge Brende, president of the World Economic Forum said.

The report identifies three key sectors—agriculture, pharmaceuticals, transport and automotive—that can be accelerated by the AfCFTA, creating a single market for 1.7 billion people and potentially increasing real income by nearly $450 billion.

The combined worth of these sectors is noted to be $130 billion.

“Africa is undergoing profound changes as the region becomes more integrated, accelerated by the African Continental Free Trade Area (AfCFTA) – a single market representing 1.7 billion people and $6.7 trillion in consumer and business spending by 2030. The full implementation of the AfCFTA agreement is projected to increase real incomes by 7 percent or nearly $450 billion,” Brende said.

For Agriculture and agro-processing, intra-African trade in agriculture is expected to increase by 574 percent by 2030, if tariffs are eliminated under the AfCFTA, employing more than half of the working population and contributing 35 percent of the continent’s GDP.

Agriculture and agro-processing initiatives involve contributions from companies like The Coca-Cola Company, Yara International, Worldwide Brewing Alliance Africa Beer Group (represented by Anheuser-Busch InBev and Heineken), and the Forum’s Global Alliance for Trade Facilitation.

Transport and logistics, The AfCFTA is projected to increase intra-African trade demand by 28 percent, with demand for almost 2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030.

Read also: Customs, AfCFTA open talks on expansion of intra-African trade

Transport and logistics initiatives include those led by companies such as DHL, Agility, and DP World.

The automotive industry in Africa is expected to grow to more than $42 billion by 2027, featuring initiatives from partners like Volkswagen, the African Association of Automotive Manufacturers (AAAM), and Our Next Energy (ONE).

For pharmaceuticals, the AfCFTA is anticipated to enhance intra-African trade, addressing the current low level (only 3 percent of demand is met by intra-African trade) and strengthening health supply chains involving initiatives and commitments from the International Federation of Pharmaceutical Manufacturers & Associations.

Despite the challenges, there is a commitment from the World Economic Forum and the AfCFTA Secretariat to collaborate with the private sector and national organisations, fostering global investment in Africa.

The authors of the report highlighted that throughout 2023, the forum continued to advance its efforts to facilitate the smooth flow of physical, capital, and digital resources in Africa.

This involved fostering robust collaboration and dialogue between the public and private sectors, promoting information-sharing, and implementing trade and investment tools in cooperation with the Forum Friends of the African Continental Free Trade Area.

Read also: Stakeholders underline role of storytelling to push AfCFTA narrative

“Momentum has been building around collaboration between the private sector and AfCFTA’s national organisations as they work together to catalyse global investment in Africa,” the report said.

“Looking ahead to 2024 and beyond, the Forum and the AfCFTA Secretariat said they are committed to facilitating and accelerating private sector investment on the continent by leveraging the power of the free trade area,” the report said.