A United Nations’ Economic Commission for Africa (UNECA) assessment of the expected impact of goods-trade liberalisation under the African Continental Free Trade Area (AfCFTA) treaty shows significant economic gains for the continent, with strong potential to promote industrialisation.
According to the assessment, AfCFTA modalities on goods trade will lead to an increase in GDP of all African countries, with a projected growth of between 0.35 percent (US$28bn) and 0.54 percent (US$44bn) in Africa’s GDP in the year 2040 relative to the baseline without AfCFTA in place.
Ghana’s GDP in 2040 will be between 0.29 percent (US$450m) and 0.31 percent (US$510m) higher than the baseline without AfCFTA, the assessment estimated.
The assessment also tipped the country’s exports in 2040 to increase by between 1.7 percent and 2.0 percent, equivalent to US$867m and US$1bn respectively, relative to the baseline situation.
With AfCFTA, the continent’s exports in 2040 will be higher by between 1.5 percent (US$40bn) and 2.2 percent (US$56bn), depending on the ambition of the liberalisation reform.
The welfare of the continent will increase slightly, the assessment showed, due largely to the significant expansion expected in intra-African trade. Ghana’s welfare is expected to increase by between 0.3 percent and 0.4 percent compared to the baseline.
Tariff revenue will however experience shortfalls ranging between 7.1 percent and 8.4 percent for Ghana and 6.5 percent and 9.9percent for the continent, depending on the ambition of the liberalisation.
Joseph Atta-Mensah, Principal Policy Advisor at the Macroeconomic and Governance Division of UNECA, who disclosed these findings at a hybrid business conference organised by the Chamber of Commerce and Industry France Ghana (CCIFG) in Accra, stressed that the expected benefits would only materialise if the AfCFTA reforms are effectively implemented.
“Strong emphasis must be placed on education and skills development in Africa to ensure that the adequate workforce is available, especially in industrial sectors,” he said.
The role of the private sector to harness trade for Africa’s development must not be overlooked; it is the private sector that trades, innovates and generates most jobs, he added.
The AfCFTA initiative will launch a single market for Africa in which member countries will liberalise up to 90 percent of their goods trade over a five-year period.
Trading is expected to start in January 2021, after it was postponed from July 2020 because of the coronavirus pandemic.
The initiative is expected to boost intra-Africa trade, which is presently low, and increase the continent’s industrialisation.