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24 - 31 December 2020
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Inner City Gazette
Continental free trade to begin
The AfCFTA’s plans to boost intra-African trade by 60% by 2034, by eliminating almost all tariffs, creating an economic bloc of $3.4 trillion. World Bank estimates indicate that if fully implemented, the AfCFTA will lift 30 million Africans out of extreme poverty and 70 million from moderate poverty.
AfCFTA secretary-general Wamkele Mene
Johannesburg - Considered the world’s largest single market in terms of the number of member nations, Africa’s blueprint for free trade begins on January 1, bringing together over 50 economies. The African Continental Free Trade Area (AfCFTA) was supposed to be operational months ago, but was delayed by the Covid-19 pandemic and slow pace of negotiations. The AfCFTA aims to build an integrated market in Africa that will see a pool of over a billion people with a combined GDP of approximately US$3.4 trillion. The United Nations Economic Commission for Africa estimates that the AfCFTA will increase intraAfrica trade from the current 16% to approximately 52% by 2022. A brainchild of the African Union (AU), the AfCFTA has been signed and ratified by 55 African states since its inception in July 2019, af-
ter about 17 years of negotiations. Internal trade within the continent of about 1.2 billion people currently stands at 16%, while 65% of their commerce is with European countries. The AfCFTA’s plans to boost intra-African trade by 60% by 2034, by eliminating almost all tariffs, creating an economic bloc of $3.4 trillion. World Bank estimates indicate that if fully implemented, the AfCFTA will lift 30 million Africans out of extreme poverty and 70 million from moderate poverty. AfCFTA’s secretary general Wamkele Mene said Africa continues to be trapped in a colonial economic model, and has to aggressively implement the new deal. “The whole intention of the idea is to build regional value chains and to allow Africans to trade commodities and also more value-added goods. If Africa does not proceed
down this road it will increasingly become irrelevant,” Mene said. President Cyril Ramaphosa has said that through the trade area, the continent’s leaders are determined to build strong and inclusive economies through industrialisation and the beneficiation of the minerals and commodities. “The AfCFTA is a significant development that will change trade patterns and has the potential to transform African economies. It will encourage economic diversification, beneficiation of our minerals and resources and value-addition to seize the opportunities arising from an increasingly open African continental market. We expect that in the new year, preferential trade in Africa will begin with significant product coverage and will be expanded over the coming years,” he said. Ramaphosa added that even prior to the agreement on the AfCFTA,
South Africa had already begun implementing an investment-led trade strategy. He explained that the country has sought to use its outward foreign direct investment in the rest of the continent to encourage balanced growth and localisation. Between 2014 and 2018, South African firms invested over R160 billion in different parts of the continent. This has made South Africa the fifth-largest source of foreign direct investment on the continent in value behind the US, France, UK and China. “Government has been working to prepare South Africa-based firms for their participation in the AfCFTA. We want to ensure that our firms, entrepreneurs, small enterprises and workers benefit from the trading opportunities that will arise as the AfCFTA commences to operate,” President Ramaphosa said.