2023-05-07 10:36:59
(Africanews.com)- The establishment of the African Continental Free Trade Area (AfCFTA) might allow a more than 50% increase in trade between the countries of the continent, according to a report published Friday by the International Monetary Fund (IMF).
It would also, once fully operational, have a significant effect on trade between Africa and the rest of the world, with an increase in exports of 29% and imports of 7%. The consequence would be an increase “of more than 10%” in the median real GDP per capita, also underlines the report.
The agreement creating the ZLECAf provides for the progressive abolition of almost all customs duties over five years for the most developed countries and over ten years for the others. It was signed by all African countries, with the notable exception of Eritrea, and ratified by the vast majority of them and in particular the main economies of the continent, such as South Africa, the Algeria, Egypt, Kenya and Nigeria. However, its implementation has been delayed: initially scheduled for July 1, 2020, it became a reality on January 1, 2021, due to the Covid-19 pandemic.
The Fund recalls, however, that in order to achieve such an impact, African States will have to accompany the implementation of the agreement with a series of reforms: “if the reduction of tariff and non-tariff barriers is accompanied by a significant improvement in the business climate, the gains for countries would be significantly higher” with these reforms, the report insists.
Without these reforms, the impact of the AfCFTA will be less. The simple reduction of barriers, tariffs or not, will allow trade between African countries to increase by only 15%, leading to a 1.25% increase in median real GDP per capita.
In order to seize all the opportunities, “it will be necessary to invest in physical and human capital, create a robust macroeconomic framework (…) and modernize the social protection system in order to support the most vulnerable during the transition phase” , insists the report
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