Benefits Of The African Free Trade Agreement

Evidence indicates that trade integration promotes the redistribution of resources to more productive sectors. The Special Product Classification (SPC) permanently exempts sensitive products from liberalization. In a scenario where the sector with the highest current customs revenues would be excluded from liberalization, UNCTAD`s simulations estimate a long-term social benefit of $10.7 billion. Customs revenue losses are expected at $3.2 billion (or 7.2% of current customs revenues). GDP and employment growth are expected to increase by 0.66% and 0.82% respectively. Intra-African trade is expected to grow by 24%, while Africa`s trade deficit will decrease by only 3.8%. (6) Leaders across the continent are largely optimistic about the AfCFTA. In OBG`s latest Africa CEO survey, which surveyed 787 senior executives in eight African markets in 2018, 72% of respondents believe that the AfCFTA would have a positive or very positive influence on the level of intra-regional trade. Overall, these developments offer significant economic opportunities for regional and international companies and investors. For the AfCFTA agreement to be successfully implemented, continued cooperation is needed. It will take time for the agreement to manifest itself on the ground and for businesses and citizens to reap the full benefits of greater integration. The EU, for example, has taken several decades to be fully implemented and has also been implemented in phases. In addition to the implementation of the agreement itself, increased investment will be needed, both in infrastructure and in human capital.

Balancing the potential benefits and dangers of integration is an urgent political issue after African countries sign the African Continental Free Trade Area agreement, which aims to promote integration. However, the researchers have not studied precisely how economic integration through trade and finance influences structural change. While there are many opportunities, important questions remain about the pace and extent of AfCFTA implementation. Africa is a highly fragmented continent, with its composite economies, at very different stages of socio-economic development. In addition, many African nations have long suffered from a lack of economic integration and regional cooperation, much of which is a remnant of colonial-era trade structures and transport networks. . . .