"Least developed countries are expected to experience the largest growth in intra-African trade of industrial products—up to 35% higher in 2040 compared to just 19% for developing African economies."
The UN Economic Commission for Africa Africa, ECA, said in its position paper on the the African Continental Free Trade Area (AfCFTA) during the Africa Trade forum in Lagos .
In the presentation, Vera Songwe, Executive Secretary of the UN Economic Commission for Africa (ECA) said that with AfCFTA in place, ECA’s modeling projects intra-African trade in agricultural products will be between 20% and 30% higher in 2040 with particular gains in sugar, vegetables, fruit, nuts, beverages, and dairy products.
" AfCFTA would provide access to markets at the regional and international levels, which would then generate state revenue, increase farmer income and expand both farmer and country capacity to invest in modernizing the sector through processing and mechanization," she said.
According to ECA, intra-African agricultural trade is particularly underexploited owing to high import tariffs, other non-tariff barriers (such as health and safety standards), low productivity, and a lack of rural connectivity.
In 2015, African countries spent about US$63 billion on food imports, largely from outside the continent.
Ratifying AfCFTA would shore up Africa’s food security, and contribute to overall economic growth through the agricultural sector.
Biggest Trade Agreement Ever
Recall that in March this year African leaders took a major step forward when 44 of 54 African nations signed the biggest trade agreement signed since the World Trade Organisation (WTO) was established.
- The AfCFTA brings together 1.3 billion people, and a combined gross domestic product (GDP) of more than $2 trillion. If ratified by each country, it will become one of the world’s largest trading blocs.
Remove 90% Tariffs on Goods
AfCFTA commits countries to remove tariffs on 90 percent of goods, progressively liberalize trade in services, and address a host of other non-tariff barriers, like long delays at national borders which hamper trade between African countries.
Eventually, free movement of people and a single African air transport market could grow within the newly created free trade area. Such liberalization is expected to provide strong impetus for intra-African trade.
Recent modelling from (ECA) projects the value of intra-African trade to be between 15% and 25% higher in 2040, compared to without AfCFTA.