The African continent is presented with the opportunity to reach more than $1 trillion in exports. And this opportunity to boost exports could happen thanks to the AfCFTA.
Indeed, the African Continental Free Trade Area (AfCFTA) is a trade agreement that aims to create a single market for goods and services across Africa. It is the largest free trade area in the world by number of participating countries, with 54 African Union member states having signed the agreement.
Africa’s total exports are set to reach $925 billion by 2035 but could be worth 29% more if the AfCFTA is fully implemented, according to a new report from Standard Chartered. In its Future of Trade: Africa report, the bank says that rising exports will be underpinned by greater connectivity, which will unlock high-growth corridors, both between African regions and with regions beyond the continent.
Intra-Africa trade is expected to reach $140 billion by 2035, equating to 15% of Africa’s total exports, with flows within East and West Africa growing by 15.1% and 13.2% respectively.
How does the AfCFTA have the potential to boost Africa’s $1 trillion export opportunity? It can do so by reducing tariffs and other trade barriers, making it easier and cheaper for African businesses to trade with each other; by increasing investment and job creation, as businesses are attached to a larger and more integrated market; and by promoting economic growth and development across Africa.
According to a study by the United Nations Economic Commission for Africa, the AfCFTA could increase Africa's GDP by up to $3.4 trillion by 2035 and create up to 29 million jobs.
The AfCFTA is still in its early stages of implementation, but it has the potential to transform Africa's economy. By removing barriers to trade and investment, the AfCFTA can help African businesses to grow and reach new markets. This can lead to increased economic growth and development, and create new jobs and opportunities for Africans.
A Kenyan manufacturer of clothing could export its products to Nigeria tariff-free, making them more competitive in the Nigerian market. A South African automotive company could export its cars to Ghana without having to pay import duties, making them more affordable for Ghanaian consumers. A Rwandan coffee producer could export its coffee to Egypt without having to go through multiple borders and customs checkpoints, making it easier and faster to get its product to market. These are examples illustrating how intra-Africa trade could boost exports to over $1 trillion.
The AfCFTA is a work in progress, but it has the potential to revolutionize the way that African businesses operate. By creating a single market for goods and services, the AfCFTA can help African businesses to grow and reach new markets, and boost Africa's export opportunity.