Thirty-one countries to start trading under AfCFTA Agreement this year

18th March 2024 By: Sabrina Jardim - Creamer Media Online Writer

Amid the increasing importance of intra-African trade, 31 countries are expected to start trading under the African Continental FreeTrade Area (AfCFTA) Agreement by the end of the year, South Africa’s Department of Trade, Industry and Competition Trade Branch Africa bilateral economic relations chief director John Rocha said during a March 14 Transport Forum webinar.

To this end, 54 out of 55 African Union member States have signed the AfCFTA, while 43 have deposited their instruments of ratification.

The AfCFTA is aimed at creating a single market for goods and services facilitated by the movement of persons to deepen economic integration of the African continent.

Supply chain advisory company Sincpoint CEO Lebo Letoalo highlighted that the AfCFTA is the largest free trade area globally connecting 1.3-billion people across Africa.

She noted that the agreement had the potential to lift 30-million people out of extreme poverty and that it was expected to boost Africa’s income by $450-billlion by 2035, while adding about $76-billion to the income of the rest of the world.

She added that the AfCFTA was aimed at transforming Africa into “the global powerhouse of the future,” adding that the agreement would progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and benefit from the growing African market.

The AfCFTA was also aimed at encouraging increased beneficiation in Africa.

“We need to get to a point where we reduce commodity dependence and foster diverse resilient economies.”

However, Letoalo pointed out that a lack of efficient transport and logistics infrastructure added about 30% to 40% to intra-African trade costs, thereby stifling growth and hindering progress.

Hence, the AfCFTA provides opportunities for investment in the expansion and upgrade of Africa’s logistics infrastructure, including ports, roads, railways and warehouses, to facilitate the seamless movement of goods across Africa and link it to the global market.

Automated systems will also be integrated into the supply chains to enable faster and more cost-effective transportation.

Rocha added that the AfCFTA provided significant opportunities for investment in the transport sector.

He highlighted that the estimated costs of trucks required as a result of the AfCFTA implementation was about $345-billion, which would enable the industry to provide about two-million trucks to transport goods across Africa by 2045.

He said the agreement was aimed at doubling intra-Africa trade within the first ten years of operation.

Meanwhile, Rocha argued that trading under the AfCFTA required private sector participation, explaining that the agreement brought “considerable benefits” for the sector.

Letoalo explained that the private sector was essential in delivering the AfCFTA’s dual mandate, by removing barriers to intra-African trade and production.

To this end, a private sector strategy that supports the production of specific value chains, such as automotive, has been created.

The AfCFTA has identified specific priority sectors, namely agroprocessing, automotive, pharmaceuticals, transportation and logistics, and digital trade.

On another note, Letoalo also highlighted that the AfCFTA Protocol on Women and Youth in Trade provided an opportunity to mainstream gender through the agreement.

This includes incorporating a gender perspective to all trade-related issues of the AfCFTA with a view to achieving gender equality and eliminating all forms of discrimination.

Gender mainstreaming aimed to address the constraints and barriers women and the youth faced when trading across borders, as well as enhance their access to broader markets, improve competitiveness in the domestic and international markets and increase participation in regional value chains, she said.

“Africa is not just a market, it’s a future waiting to unfold. The AfCFTA Agreement is not just a trade agreement, it’s the economic and social cornerstone of the continent awaiting to globally integrate,” Letoalo expressed.