By Zephania Ubwani
Intra-African trade will increase by 52.3 per cent under the African Continental Free Trade Area (AfCFTA), according to the African Trade Report 2018.
The report, released by a pan African financial institution, Areximbank,the value and volumes of traded goods and services are also expected to more than double within the first decade of implementation, it has been revealed.
Trade experts say this will happen if the implementation “is accompanied by robust trade facilitation measures”.
According to the report, removal of all tariffs will lead to welfare gains of $3.58 billion.
The Gross Domestic Product (GDP) is anticipated to increase by 0.65 per cent, volume of exports grows by 2.94 per cent and imports increase by 3.13 per cent.
However, removal of all tariffs and all non-tariff barriers (NTBs) will lead to a welfare gain of $17.95 billion, 3.15 per cent growth in GDP, 5.2 per cent growth in exports and 6.59 per cent growth in imports.
“The AfCFTA is expected to be a game changer in terms of intra-African trade,” said a report presented to the just-ended symposium organized by Pan African-Centre for Policy Studies (PACPS), a think tank based in Arusha.
The agreement already in force after it was ratified by the minimum required number of 22 countries rising to 28 last month is deemed to be one of the largest trade blocs in the world.
In terms of the number of countries it is going to be the largest single market of 1.2 billion people. It will have a combined GDP of 2.5 trillion.
While Africa’s population is projected to reach 2.5 billion by 2050, the economy estimated to grow twice as rapidly as that of the developed world.
Intra-African trade is lower than the existing potential due to various factors including lack of access to trade and market information and low level of industrialization.
Poor state of trade-related infrastructure and weak logistics infrastructure has added to the woes leading to finance gap of $ 70million to $110bn a year.
Limited access to trade finance have also added to the woes such that: Africa’s trade finance gap is estimated at over $120 b.
Informal trade within the continent, deemed to have less strings, has also not done much better and is only 40 per cent, averaging between $70 to $ 140bn.
PACPS said it organized the gathering of African trade experts and scholars in an endeavour to push for socio-economic transformation of the continent through increased intra-regional trade and movement of people.
“We are proposing better coordination, harmonization and inclusion and assessing the capacity of the regional economic communities,” said Prof Adolphe Lawson, the executive director of the centre.
