Skip to main content

AfCFTA: The key success factor in Africa’s long-awaited development

 


For decades, the African continent had been characterized by fragmented markets that inhibit the economic growth of individual countries. Prior to introducing the African Continental Free Trade Area (AfCFTA) in 2018 and its official commencement in January 2021, international trade statistics showed that 85 percent of Africa’s trade was with the rest of the world and only 15 percent within its borders. AfCFTA, therefore, is an intervention that aims to defragment the continent and boost productivity of the economies of member states.

The defining change that AfCFTA brings is anchored on three main pillars – size, free movement, and trade. The sheer size of the continent makes AfCFTA an exciting prospect. The collective GDP of African countries amounts to some USD2.5 trillion, making it the 8th largest economy, globally. Africa is also known to have one of the highest population growth rates globally, with 1.2 billion people living on the continent.  This means at the get go, AfCFTA will provide 1.2 billion potential customers across 54 countries. 

Beyond its groundbreaking size, AfCFTA promises to be a paradigm shift and a more profound commitment to integrating the continent by negotiating goods and services simultaneously. The agreement is a potential economic game-changer for Africa’s development because of its potential to enhance intra-African trade and provide an opportunity for countries in the region to competitively integrate into the global economy, reduce poverty and promote inclusion.

Intra-Africa trade, which currently stands at 15 percent is projected to increase to 50 percent in 2028 as a result of the opportunities created by AfCFTA. The agreement is also promising to remove trade taxes on at least 90 percent of all trade between African countries. By boosting intra-African trade and fostering regional value chains and production networks, AfCFTA is expected to drive Africa’s structural transformation.

Analysts believe that increasing trade through AfCFTA will provide the incentive for reforms to activate productivity and job creation, thereby decreasing the incidence of poverty on the continent. Indeed, the World Bank suggests that when the agreement is implemented, it could help lift an additional 30 million people from extreme poverty and 68 million people from moderate poverty by 2035. 

Read also: AfCFTA boss urges stakeholders to eliminate barriers likely to impede success

The third pillar involves the free movement of goods and people across the continent. Under the current dispensation, visa barriers, border control, and expensive air tickets, travel between African countries is quite challenging. Under AfCFTA, Africa’s entrepreneurs, professionals, workers and consumers, will be able to move across the continent, allowing them and the businesses they represent to take advantage of opportunities to trade in goods and services. What remains critical is the agility of entrepreneurs and business people to recognize these vast opportunities and make the jump to take advantage of the situation.

Businesspeople and entrepreneurs have to position themselves strategically to leverage the opportunities provided by the agreement. As a starting point, entrepreneurs must arm themselves with as much information as possible about any deals that are on the table to help navigate through the nuances of the agreement.

Beyond learning about the agreement, value addition must be a preoccupation of businesses if AfCFTA is to benefit them. Value addition comes with the capacity building that enables African companies to progress from local players to regional players. The business community must adopt modern operations, strategies and systems to ensure competitiveness. 

In Ghana, there are a number of initiatives that are critical in ramping up local businesses to take advantage of the AfCFTA. This includes the National Export Development Strategy (NEDS). The NEDS seeks to build synergies with government’s flagship programmes, such as 1 District 1 Factory, Planting for Food and Jobs, Planting for Export and Rural Development, District Industrialization for Jobs and Wealth Creationto ensure that products emanating from companies operating under these programmes are competitive and marketable in the local and foreign markets. 

Equally critical is the need for Ghanaian businesses to position themselves strategically to take advantage of this great opportunity. Retooling and upskilling for businesses become an urgent imperative if the benefits of the AfCFTA are to be realized. It is worth noting that there are institutions with the requisite knowledge at the continental level to help local businesses. 

The agreement has received considerable political attention across the continent and looks promising from all indications. But if the continent is to realize the full benefits of AfCFTA, local businesses must develop and position themselves to be competitive and attractive on the regional market.  

Source: Dinah Kaleo-Bioh, Head, Client Coverage, Stanbic Bank

Comments

Popular posts from this blog

Nestlé Ghana Limited Wins Overall Best Industrial Company Of The Year at 13th AGI Industry & Quality Awards

  Nestlé Ghana Limited has been honored with four prestigious awards at the 13th Association of Ghana Industry and Quality Awards ceremony. The event, held in an esteemed setting, gathered prominent figures from Ghana’s industrial sector. Amidst the anticipation, Nestlé Ghana emerged as one of the evening’s notable winners, securing accolades in several key categories. This recognition underscores Nestlé Ghana’s relentless pursuit of excellence and innovation, marking a significant milestone that highlights the company’s substantial contributions to the manufacturing industry in Ghana. Nestlé Ghana's exceptional performance was acknowledged with the following awards: Overall Best National Quality Award, Diamond Category (Food) Overall Best Practices in Sustainable Manufacturing Best Company (Food Sector) Overall Industrial Company of the Year, affirming its status as a leader not only within the food sector but also across Ghana's entire industrial landscape. This success is a ...

Anglogold Ashanti Obuasi Mine tops 2024 Sustainability & Social Investment Awards

 AngloGold Ashanti Obuasi Mine has confirmed its status as sustainability champions by sweeping nine awards, the most won by a company at the 2024 Sustainability & Social Investment Awards (SSI) held at Movenpick Ambassador Hotel in Accra. The feat comes on the heels of a dominant performance in last year's event where AngloGold Ashanti Obuasi Mine swept seven awards. The SSI Awards organised by Ianmatsun Global Services recognizes the most outstanding sustainability, Corporate Social Responsibility (CSR), Environmental, social, and governance (ESG) initiatives in the country and beyond as well as the best teams and individuals who brought them to life. This year's event, which was the 8th edition, was under the theme "Climate Action Now: Accelerating Decarbonization and Building Resilience". The awards won by AngloGold Ashanti on the night include SSI Company of the Year, Best Company in Women Empowerment (project), SSI Company of the Year ( Environment), Best Co...

Zoomlion Advocates Community & Gender inclusive waste management for Climate Action at COP 29

 Africa's waste management giant, Zoomlion Ghana Limited has advocated for an integrated approach to waste management that considers the interest of community members, women and vulnerable groups. James Deku, a Communications Officer of Zoomlion Ghana Limited made this call at the 29th session of the Conference Of Parties (COP 29) of the United Nations Framework Convention for Climate Change (UNFCCC) at Azerbaijan, Baku whiles speaking on the topic "Community-Driven and Gender Inclusive approaches to waste management for Climate Action ". He said the waste sector is a major contributor of methane emissions which is a potent greenhouse gas causing climate change hence the need to manage waste in a manner that considers the interest of all stakeholders. Zoomlion's waste management model is designed and operated in a manner that considers the interest of all stakeholders. Through a Public Private Partnership (PPP) model, local authorities engage community members in clea...