Jan 25, 2022

Mawazo Writing Africa

Writing about the main

AfCFTA on track to lift 100 million Africans out of poverty by 2035

The African Continental Free Trade Area is the largest free trade area in the world and the largest trade organization since the founding of the World Trade Organization, which brings together 54 African Union countries and eight regional economic communities to create a single market. It has a population of approximately 1.3 billion people and a total GDP of approximately US$3.4 trillion.

The AfCFTA is not only a free trade area, but also a flagship project of the African Agenda 2063 Union (AU). Africa’s long-term development strategy to transform the continent into a global powerhouse of the future.

The agreement establishing the AfCFTA was signed by 44 AU member states on March 21, 2018 in Kigali, Rwanda. Ten other countries have now signed the pact. The AfCFTA Agreement entered into force on May 30, 2019, 30 days after the deposit of the 22nd instrument of ratification, as stipulated in Article 23. Trading under the AfCFTA agreement began on January 1, 2021.

Opportunities

The AfCFTA market offers many opportunities, some of which are highlighted in this article.

Consumer welfare: Consumers have an unlimited choice of quality products at an affordable price. Because AfCFTA aims to abolish import duties on products that are produced within Africa and thus meet the rules of origin. It also defines standards to be applied to these products to ensure quality.

Attract investment: The size of the market will attract both African and foreign investors. The AfCFTA legal framework provides a protocol that establishes rules and regulations for investment facilitation and investor protection.

Job Creation: The trade zone will encourage industrialization through development at regional and continental levels Advance value chains. The AfCFTA rules of origin provide criteria that a product must meet in order to be preferred on the market duty-free and quota-free. This includes products that are manufactured entirely in that State Party and products that have been significantly modified in that country.

Eradicate poverty: The World Bank estimates that the AfCFTA will increase Africa’s GDP could increase by 7 percent – nearly $450 billion. It should also bring notable benefits in income distribution, lifting about 30 million people out of extreme poverty and 68 million out of moderate poverty.

Income distribution:< /strong> The AfCFTA will bridge the pay gap between men and women. The World Bank study found that African women will benefit greatly as they make up the majority of those involved in intra-African trade.

Economic growth

A growing manufacturing sector would provide new job opportunities, particularly for Women. The report estimates that implementation of the agreement would result in a wage increase of almost 10 percent compared to a business-as-usual scenario, with larger gains for unskilled workers and women.

Wages would increase somewhat increase faster for women than for men as production in traditionally female-intensive key industries increases. The World Bank estimates that wages for women would increase by 10.5% from baseline by 2035, compared to 9.9% for men.

A large proportion of small border crossing operators tend to be female. Women take on a variety of roles in retail trade as border traders, transporters, processors or saleswomen. They often face more severe barriers to trade than their male counterparts in the form of higher trading costs and widespread corruption, more limited access to price and market information, and more frequent harassment and abuse.

Removing non-tariff barriers:

Eliminating NTBs is critical to boosting intra-African trade and achieving AfCFTA goals. It will reduce the cost of cross-border trade and facilitate the movement of goods across borders. The majority of AfCFTA benefits will be realized when States Parties efficiently manage and remediate NTBs.

Annex 5 of the Protocol on Trade in Commodities provides a reporting, monitoring and remediation mechanism for traders to file a complaint a specific trade barrier they have encountered in the cross-border movement of goods and services. The mechanism is available online at www.tradebarriers.africa

Private Sector Development:

To achieve AfCFTA’s objective and ensure that gains in economic growth be achieved inclusively – by women, youth and SMEs – and ultimately sustainable, real action on the ground is required. The private sector, made up of traders, investors and producers, is the engine of economic growth and the main driver of job creation. Recognizing the central role of the private sector in delivering on the promises of the AfCFTA, an integrative private sector strategy was developed to identify key barriers to trade and manufacturing in four priority value chains – agri-processing, automotive, pharmaceuticals, and transportation and logistics.

These value chains have been prioritized based on the relatively high level of import substitution today – an indicator of existing demand in local markets and some level of existing exports – an indicator of the ability to produce these goods locally. Sectors identified for future waves include horticulture, textiles, financial services, telecoms and IT.

Inclusiveness of women and youth:

The AfCFTA can make a significant Contribute Opportunity for women by giving them a head start in strengthening their economic self-determination. African leaders have signaled their willingness to create an enabling environment for women to take full advantage of the trade opportunities offered by the AfCFTA.

The Assembly of African Union Heads of State or Government therefore committed to “expand inclusion in the operations of the AfCFTA through interventions supporting young Africans, women and small and medium-sized enterprises, as well as the integration of informal cross-border traders into the formal economy through the implementation of the simplified trade regime”.

A protocol on women and youth in trade will be developed in accordance with instructions from African leaders. It is expected to address the specific constraints and barriers women face when trading on the continent. The protocol will enable AfCFTA states parties to effectively address restrictions on women in trade and create an environment that allows women to take advantage of the agreement by gaining access to larger markets, improving their competitiveness and participating in regional value chains .

< strong>Agriculture:

Article 3(g) of the AfCFTA provides that one of the general objectives is to “encourage industrial development through diversification and regional to promote value chain development, agricultural development and food security”. . The agricultural sector is a central feature of African economies. It contributes more than 60 percent to the population’s employment and more than a third to the total GDP.

In addition, Africa mainly exports traditional agricultural products such as cocoa, coffee, cotton, tea and spices to other countries of the continent; and imports food products such as grains, vegetable oils, dairy, fish and meat products to meet food security requirements.

Nevertheless, promoting intra-African agricultural trade (and developing agri-processing) is crucial to the endeavour of Agenda 2063 and AfCFTA to create jobs, promote inclusive development, alleviate poverty and secure food security for Africans.

Prudence Sebahizi is Chief Technical Adviser of AfCFTA