The African Continental Free Trade Area (AfCFTA), according to Economic Commission for Africa (ECA), has the potential to boost intra-African trade by more than 52 per cent through the elimination of import duties alone
AfCFTA aims to provide more benefits than other trading arrangements with regions outside the continent, said Andrew Mold, acting director of UN ECA in eastern Africa.
Speaking at a two-day conference organised by Rwanda Ministry of Trade and Industry, the International Growth Centre (IGC) and World Bank, Mold indicated that the AfCFTA marks a fundamental step towards dismantling barriers and reducing costs to intra-African trade, boost industrialisation, improve productivity and competitiveness of Africa for the creation of the much-needed jobs in the continent.
He explained that Africa's trade with the rest of the world over the past six decades has not delivered the promised diversification. Most countries on the continent are still import-dependent and export excessive amounts of unprocessed commodities, and, as a consequence, run up large trade deficits.
Based on ECA research, Africa's trade balance moved from a surplus of US$24bn in 2012 to a deficit of US$87bn in 2014 and US$155bn in 2016.
Africa's merchandise imports declined, from US$642bn in 2014 to US$501bn in 2016. Exports, however, contracted significantly more than imports over the period, contributing to the region's widening trade deficit.
“Integration is critical for Africa to drive manufacturing sector and industrialisation and to boost its production and trade. This matters because African trade deficits are principally driven by the lack of industrialisation,” Mold added.
From 2012-2014, more than 75 per cent of Africa's exports to outside the continent were extractives, such as oil and minerals.
