AfCFTA’s $3-trillion trade growth potential hinges on more manufacturing

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Limited production capabilities within Africa are the main reason why there is not much trade among its nations

Mattias Hedwall, Wildu du Plessis and Virusha SubbanIf fully implemented, the African Continental Free Trade Area will unlock significant but uneven growth opportunities on the continent.

Our research indicates that to unlock the full $3-trillion in growth potential that free trade will bring, governments and businesses in Africa need to fully support the AfCFTA agreement and prioritise it over the patchwork of regional and competing agreements in Africa. Despite the challenges, however, some such regional bodies have successfully encouraged effective trade among member countries. For example, Côte d’Ivoire, Kenya, Morocco, Senegal and SA have become regional trading hubs, having leveraged alliances they established through their regional communities. One of the ways forward for African economies to further implement effective intraregional trade may be to draw on the lessons learnt from these.

African nations now tend to trade more with Europe and Asia than with neighbouring markets. Less than a fifth of African countries’ exports are destined for other countries on the continent.

 

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