The much-anticipated African Free Trade Agreement (AfCFTA), through which trading commenced on 1 January this year, could bolster the continent’s income by US$450 billion (more than N$6 trillion) and lift 30 million people out of extreme poverty by 2035, if accompanied by significant policy reforms and trade-facilitation measures, according to the World Bank. Confirmed to be the world’s biggest free trade zone by size, the agreement which ushered in a new era for African trade has created a market of 1.2 billion people and drives a combined GDP of US$2.5 trillion (N$37.5 trillion) when fully operational.
A statement from the office of Southern African Customs Union (SACU) Executive Secretary, Paulina Elago, noted that the free trade agreement marks a significant milestone towards Africa’s integration objectives.
“The AfCFTA is one of the flagships for achieving Africa’s aspirations ‘The Africa we want’, as outlined under the Africa Strategic Framework for Development, Agenda 2063. The AfCFTA primarily aims to boost intra-African trade, continental integration and development, with the target of increasing trade within the continent,” the statement read.
Today, (Thursday, 8 April 2021) the SACU Secretariat will host a three-hour webinar to disseminate information and raise awareness on the implementation of the AfCFTA. The webinar is expected to primarily share information with the business community on the market dispensations under the agreement.
Senior representatives from SACU Ministries of Trade and Industry as well as Customs Administrations in SACU member states are expected to participate to share their countries’ perspectives, status on the implementation of the AfCFTA and measures put in place to facilitate trade under the continent-wide agreement.
“This will include information regarding customs administrative arrangements for the implementation of the agreement, continent-wide market opportunities and export facilitation at the national level. The business community will also share their views about this continental milestone,” read the SACU statement.
Meanwhile, Wim Naudé, a Professor of Economics at the Cork University Business School in Ireland, emphasised that “Trade is one of the great engines of economic growth and prosperity as it allows countries to specialise in production and diversify in consumption. Specialisation in production allows for learning, innovation and higher productivity. Exchanging this for goods from elsewhere leads to higher consumption and welfare than what a country would be able to achieve in economic independence.”
The economic professor also noted that the free trade area should strengthen all of these effects as there will be fewer barriers to access markets, larger markets, more choice for consumers and more competition to pressurise firms to be more productive.
Naudé added that the free trade area will stimulate investment, innovation, and entrepreneurship.
“The AfCFTA is, therefore, good news and a historical opportunity for African countries. The fact that countries’ economies differ is no issue—in fact precisely because economies are different, trade is even more important to achieve gains in welfare. Remember, most African countries are relatively small, and also, Africa has more landlocked countries than any continent on earth—so removing trade barriers is even more important in Africa than for instance in large coastal countries,” Naudé explained.