Intra-African trade set to increase under AfCFTA
WHEN the founders of the Organisation of African Unity (OAU) got together more than 60 years ago to craft an idea of a continental organisation, they envisaged an integrated and united Africa, one that would deliver peace and prosperity to its people.
For the many decades that followed the formation of the OAU and, subsequently, the AU, there had been relentless calls to realise the dream of cross-border economic integration in Africa, as envisaged by the founders of the OAU.
There can be no other indication that Africa has finally achieved its integration than the implementation of the continent’s most ambitious integration initiative, the African Continental Free Trade Area (AfCFTA), which starts in January 2021. With the continent’s population reaching 1.3 billion in 2020, the agreement could not have come at a better time.
South Africa hosted the Extraordinary Summit on the AfCFTA and on Silencing the Guns in Africa on December 5 and 6. The summit was crucial as it laid down the foundation for the start of trade under the AfCFTA on January 1, 2021.
This is an exciting time for the continent. The AfCFTA agreement will create opportunities and benefits for all the nations of the continent. It will enable companies to expand their markets by exporting goods and services across the continent. By facilitating the movement of goods and services among African countries, the AfCFTA will create opportunities to accelerate intra-Africa trade, grow businesses, create jobs and increase infrastructure development on the continent.
The recent UN Conference on Trade and Developments report shows that intra-African exports were 16.6% of total exports in 2017, and this can drastically increase with the signing of the AfCFTA agreement, when tariffs are removed on certain goods.
Furthermore, the Department of Trade, Industry and Competition, using a Trade Law Centre report, points to evidence there has been a steady increase in trade in Africa between 2017 and 2018. During this period, South Africa’s intra-Africa exports increased by 7%, while exports by Nigeria, Egypt and Ghana increased by 41%, 30% and 26%, respectively.
South Africa’s intra-Africa imports increased by 35%, while imports by Zimbabwe, Ivory Coast, Egypt and Morocco show a similar increase.
This comes on the back of a World Bank report, which estimates that implementing the AfCFTA would contribute to lifting an additional 30 million people from extreme poverty by 2035. The report says real income gains from full implementation of the agreement could increase by 7% or nearly $450 billion (R6.8 trillion).
It is our hope the summit in Johannesburg can be used to rally more countries to speed up the ratification of the agreement, so every member state of the AU is on board for the full implementation of the agreement. The AfCFTA is one of the flagship projects of the AU’s Agenda 2063; it is therefore important that all member states are part of this landmark agreement.
The agreement presents the greatest opportunity for Africa to fulfil its aspiration of a united, integrated and prosperous continent.
Despite the remarkable progress made towards the final roll-out of the AfCFTA agreement, it’s bound to be hindered if we don’t address conflict situations and some of the peace and security concerns in several African countries.
The continent has made remarkable progress in the quest for peace and South Africa has been involved in many peacekeeping missions on the continent.
However, many countries continue to struggle with peace and governance issues. It is for these reasons that all Africans must support the quest by the AU to “Silence the Guns” in Africa by 2020