Benefits of Africa’s free trade bloc could boost post-pandemic recovery
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The Covid-19 pandemic looks set to devastate African economies. A dramatic increase in public expenditure with a sharp drop in revenues on the back of global market turmoil, declining commodity prices and sharp declines in key sectors such as travel and tourism will have a profound and lasting impact.
While numbers are still uncertain, the global economy is expected to shrink by a huge 5.2% this year, with Sub-Saharan Africa’s economy declining by more than 3%. This follows a period of modest economic performance in recent years, with GDP growth barely matching the continent’s 2.7% population growth rate.
Despite these alarming statistics the crisis does present an opportunity for economic transformation in Africa. Shortened supply chains with value-added local content and support will reduce the continent’s dependence on external resources. Bolstered by the African Continental Free Trade Area (AfCFTA), a unique space has opened up for purpose-built small, medium and micro enterprises (SMMEs), equipped specifically for the African context, to emerge as the new pistons of economic recovery.
Never before has the need for economic modernisation and diversification, driven by scalable production and services, been more critical. Regional integration is key to unlocking this. The AfCFTA, launched in March 2018, will be the largest free trade area in the world based on the number of participating countries, and an ambitious leap into an industrial future.
With a combined GDP of about $3.4-trillion, and connecting 1.3-billion people across 55 countries, the AfCFTA could lift 30-million Africans out of extreme poverty and drive the reforms needed to significantly improve the long-term growth potential of African countries through true connectivity and the movement of goods, services, people and information.
Trading under the agreement was expected to begin in July, but this has been postponed to January as a result of Covid-19. This delay presents an opportunity for policymakers to tailor the rebuilding of economies in the post-pandemic phase to the objectives of the AfCFTA, thus leveraging the benefits more decisively.
While African governments moved quickly to co-ordinate their response to the crisis and integrate their supply chains across the continent, African enterprises supported their efforts by creating a range of critical products and services to fill local supply gaps, which had the added benefit of helping build local capacity and value chains. The crisis has shown that industrial production in Africa can be rapidly intensified, and African industries can respond to demand if ...
While numbers are still uncertain, the global economy is expected to shrink by a huge 5.2% this year, with Sub-Saharan Africa’s economy declining by more than 3%. This follows a period of modest economic performance in recent years, with GDP growth barely matching the continent’s 2.7% population growth rate.
Despite these alarming statistics the crisis does present an opportunity for economic transformation in Africa. Shortened supply chains with value-added local content and support will reduce the continent’s dependence on external resources. Bolstered by the African Continental Free Trade Area (AfCFTA), a unique space has opened up for purpose-built small, medium and micro enterprises (SMMEs), equipped specifically for the African context, to emerge as the new pistons of economic recovery.
Never before has the need for economic modernisation and diversification, driven by scalable production and services, been more critical. Regional integration is key to unlocking this. The AfCFTA, launched in March 2018, will be the largest free trade area in the world based on the number of participating countries, and an ambitious leap into an industrial future.
With a combined GDP of about $3.4-trillion, and connecting 1.3-billion people across 55 countries, the AfCFTA could lift 30-million Africans out of extreme poverty and drive the reforms needed to significantly improve the long-term growth potential of African countries through true connectivity and the movement of goods, services, people and information.
Trading under the agreement was expected to begin in July, but this has been postponed to January as a result of Covid-19. This delay presents an opportunity for policymakers to tailor the rebuilding of economies in the post-pandemic phase to the objectives of the AfCFTA, thus leveraging the benefits more decisively.
While African governments moved quickly to co-ordinate their response to the crisis and integrate their supply chains across the continent, African enterprises supported their efforts by creating a range of critical products and services to fill local supply gaps, which had the added benefit of helping build local capacity and value chains. The crisis has shown that industrial production in Africa can be rapidly intensified, and African industries can respond to demand if ...