260 Africa in the New Trade Environment
are the top product traded within the continent, accounting for about 18 percent. Although Africa has almost half the world’s uncultivated arable land and high demand for food, only 11 percent of its food products and only 7 percent of its vegetables were traded within the continent. This suggests that intraregional trade could increase the diversification of traded goods as well as production activities in the region.
The Promise of the AfCFTA: Evaluation of Its Impact on Economic Outcomes The potential impacts of various agreements under the AfCFTA could only be estimated ex ante. Though ex ante estimations have their own limitations in terms of tracking long-term dynamic effects, they provide important insights about the directions of the potential gains and losses. Table 6.4 summarizes a review of recent studies that estimate the potential impact of implementing the AfCFTA. The gains in total income range from a low of 0.1 percent to a high of 2.24 percent, reaching much higher when other complementary reforms such as reduction of NTMs and trade facilitation programs are included in the analysis. The studies also highlight the disparity in gains across countries, suggesting a role for the African Union to preemptively address the expected disparities in the gains and losses from such trade arrangements, both across countries and within countries. Because the AfCFTA would boost economic growth relative to baseline GDP projections, greater openness among these countries would result in greater GDP growth in the long run. In the short run, however, there would be some economic costs, particularly in the scenario in which NTMs in goods and transaction costs are reduced intraregionally. The different scenarios for implementing the AfCFTA would also lead to important disparities in economic growth rates across African countries. The elimination of intra-Africa tariffs is not crucial to boost growth for most African countries, but the reduction in NTMs and complementary policies that facilitate trade are the key drivers for trade-led economic growth for most of them in the long run. A review of studies that evaluate the AfCFTA’s impact show that the immediate gains in income are expected to be relatively moderate, reaching a high of 4.2 percent and going as low as 0.1 percent in some studies. The largest gains accrue from a significant rise in trade, particularly exports, which are expected to rise significantly. Though estimates vary significantly, gains in exports could reach a high of 51.1 percent (AfDB 2019). And the biggest share of these trade gains is associated with the reduction of NTMs and improvements in trade facilitation rather than elimination of tariffs.
