In order to reduce trade volatility and spur African economic growth, Albert Zeufack, the Chief Economist for Africa World Bank, has urged the ratification and effective implementation the African Continental Free Trade Agreement (AfCFTA)
Speaking at a video conference at the launch of this year’s African’s Pulse report, a bi-annual analysis of issues shaping Africa’s economic future, Zeufack said effective implementation of the free trade policy would strengthen regional value chain for enhanced development.
The CFTA will create a single continental market for goods and services, with free movement of business persons and investments also paving way for the acceleration and establishment of the Continental Customs Union.
According to the African Union Commission, the AfCFTA aims to increase intra-African trade by 52.3 percent by the year 2020, remove tariffs on 90 percent of goods, liberalise services and tackle other barriers of inter-African trade, such as long delays at border posts.
The AfCFTA was originally billed to be the largest free trade zone in the world, but the slow pace of ratification now puts this in doubt, at least for now. However ratification of the treaty by The Gambia a few days ago has brought the number of ratifications to 33, which makes for the threshold required for it to come into force about one year after agreement to create the free trade area was first reached by African Heads of State.
To boost the policy initiative among member states, the European Union (EU), has committed €4 million, out of the estimated €50 million, needed to fund the establishment of the AU Trade Observatory, a key pillar of the implementation of AfCFTA.
Africa Pulse Report
The report showed that growth in sub-Saharan Africa was downgraded to 2.3 per cent for 2018, down from 2.5 per cent in 2017. This was attributed to low economic growth, domestic macroeconomic instability, including poorly managed debt, inflation, and fiscal deficits; political and regulatory uncertainty; and fragility that were having visible negative impacts on some African economies.
The report indicated fragility in a handful of countries which was costing Sub-Saharan Africa over half a percentage point of growth per year, which adds up to 2.6 percentage points over five years.