“The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive.” Dr. Albert Zeufack, Chief Economist for Africa, the World Bank Photo by The World Bank
Will Trade Agreement Deliver New Economic Dawn for Africa? Africa’s journey to market integration began in earnest with the commencement of trading under the African Continental Free Trade Area (AfCFTA) – the world’s largest free-trade area – on January 1, 2021, creating a market of 1.2 billion people and the eighth economic bloc in the world with a $3-trillion combined GDP, that is expected to more than double by 2050. The creation of an “African Common Market” has been a major regional goal for decades, since the Lagos Plan of Action of 1980. Now, the continent is emerging as a surprising leader in advancing rules-based trade—and its success is highlighting how developing countries could play a key role in shaping a 21st century trade agenda. “The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” said Albert Zeufack, the World Bank’s Chief Economist for Africa. “The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers –women and men, skilled and unskilled—across all countries and sectors, ensuring the agreement’s full benefit.” As reported by the World Bank in July 2020, AfCFTA represents 8
ALEN MAGAZINE - SPRING 2021
a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion. If implemented fully, the trade pact could boost regional income by 7% or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035. The World Bank’s report suggests that achieving these gains will be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which was estimated to cause up to $79 billion in output losses in Africa in 2020. The pandemic has caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food. Because of the pandemic, Africa is expected to suffer its first outright recession in 25 years as output shrinks by as much as 5.1 percent this year. Successful implementation of AfCFTA would help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs. In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries. By replacing the patchwork of regional agreements, streamlining border procedures, and prioritizing trade reforms, AfCFTA could
