- Capable Of Lifting 30 Million Out Of Extreme Poverty
The African Continental Free Trade Agreement, AfCFTA if successfully implemented is capable of improving Africa’s income by $540 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.
This is according to a latest report by The World Bank.
“The trade pact could improve regional income by $540 billion – or around seven percent of current regional income – speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.
With the aim of creating a single, Africa-wide economic market, AfCFTA offers its members unhindered access to commodities, goods, and services across the continent.
In light of the havoc that COVID-19 has wreaked on the African economy, the report suggests that gains achieved will be particularly important.
The pandemic has already caused major trade disruptions across the continent, including in critical medical supplies and food, and is expected to cause up to $79 billion in output losses in 2020.
However, by supporting regional trade and reducing trade costs, the successful implementation of AfCFTA would cushion negative COVID-19 effects on economic growth.
Most of AfCFTA’s income gains are likely to come by cutting red tape and simplifying customs procedures” the report stated.
The report explained that tariff liberalization accompanied by reducing non-tariff barriers would boost income by about $153 billion.
The remaining $292 billion would result in measures such as lowering trade costs for businesses and facilitating African businesses to integrate into global supply chains.
In the longer term, the pact is expected to provide a path for integration and enhanced growth for African countries, the report maintains.
Moreover, by replacing a patchwork of regional agreements, streamlining border procedures, and prioritizing trade reforms, AfCFTA could also help increase resiliency to future economic shocks.
While overall economic gains would vary – with the largest benefits going to countries with highest trade costs – the report pointed out that the agreement would spur larger wage gains for women, while boosting wages for skilled and unskilled workers alike.
By reshaping markets and economies across the region, the report revealed that the pact would spur the growth of new industries and expand key sectors.
However, World Bank’s Chief Economist for Africa, Albert Zeufack is worried about the successful implementation of the pact.
“Successful implementation will be key. There is a need to monitor the impacts on all workers –women, and men, skilled and unskilled—across all countries and sectors, ensuring the agreement’s full benefit” he said.
Recall that in 2018, the AfCFTA was introduced as a platform where African nations are obliged to ink an economic deal, which will intend give way to the creation of a free trade zone by Africans for all Africans. Like the Economic Partnership Agreement with the European Union, the aim of this continental free trade area is to establish a flexible trade and investment among nations, thus boosting intra Africa trade, promote private sector growth, spur industrialization and curb poverty, among other things.
