The African Continental Free Trade Area (AfCFTA) holds “immense potential” for the social and economic development of Africa, as renewing the rules of trade will facilitate better cooperation to boost growth, reduce poverty and broaden economic inclusion, says the World Economic Forum (WEF) .
AfCFTA, which was launched this month, is the world’s biggest free trade area and Africa’s most ambitious and recent effort to liberalise trade.
“Renewing the rules of trading will facilitate better cooperation to boost growth, reduce poverty and broaden economic inclusion,” WEF president Borge Brende said on Tuesday.
Launching the ‘Connecting Countries and Cities for Regional Value Chain Integration – Operationalising the AfCFTA’ report, he said the WEF had sought to provide policy advice for accelerating the expansion of regional value chains in emerging manufacturing economies, such as the automotive industry.
“It is perhaps the most ambitious free trade project since the creation of the World Trade Organisation itself. Actively promoting trade liberalisation to encourage new areas of growth is a pragmatic response to the reduction in global trade [owing] to the Covid-19 pandemic and will position Africa as an enhanced destination for investment from multinationals,” commented Deloitte Africa emerging markets MD Martyn Davies.
Although the continent can do little to counter the global forces inclining towards deglobalisation, it can embrace a self-supportive regionalism through enhanced intra-African trade, he suggested.
Insufficient and inert inter-linkages between African economies have exacerbated the impact of the Covid-19 pandemic on the continent’s supply chains. Yet, Davies noted that from local production of essential products to improving port and customs efficiencies (often flagged as a challenge in Africa) the response to the pandemic illustrated how meaningful impact is created through collaborative efforts.
“Successfully implemented, current efforts by the African Union will stimulate trade as well as deepen and create new regional value chains in Africa. Lessons learned should be applied to improving production capabilities in other industries so that economic and trade benefits can be realised.”
The WEF paper is part of a series investigating five ways to drive economic recovery and build resilience in the context of the AfCFTA Agreement, namely new financing models for rapid recovery; unlocking manufacturing to mitigate global supply chain risks; leveraging integration and regional value chains; revitalizing infrastructure and connectivity; and scaling up digital transformation and inclusive innovation.