Photo by: Bloomberg
African heads of State and global CEOs attending the World Economic Forum (WEF) Annual Meeting, in Davos, this week, have shown support for the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
The report, titled ‘AfCFTA: A New Era for Global Business and Investment in Africa’, outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, as well as illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report is aimed at providing a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, subregional and continental value chains and accelerating industrialisation, all of which are closely tied to the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, both by area and by number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined gross domestic product of more than $3.4-trillion.
Conceived in 2018, it now has 54 national economies in Africa as members, and has the potential to attract billions of dollars in foreign investment, boost overseas exports by a third, double intracontinental trade, raise incomes by 8% and lift 50-million people out of poverty.
To ease the pain of transitioning to its new single market, Africa has learned from trade liberalisation in North America and Europe.
“Our range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics. The forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing,” WEF Børge Brende said.
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness.
“The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” WEF Africa regional agenda head Chido Munyati said.
The report focuses on four key sectors that have a combined worth of $130-billion and represent high-potential opportunities for companies looking to invest in Africa, including in the automotive, agriculture and agroprocessing, pharmaceuticals and transport and logistics sectors.
“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” AfCFTA secretary-general secretariat Wamkele Mene said.
“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” Thunderbird School of Global Management executive director and Professor and WEF regional action group for Africa co-chair Landry Signé said.
The WEF is actively working towards implementing trade and investment tools through initiatives, such as Friends of the AfCFTA, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.