‘Use comparative advantage to reap AfCFTA benefits’


African countries should use their comparative advantage to reap the benefits from the African Continental Free Trade Area (AfCFTA), an expert has said, despite fears of revenue losses created by the continent’s single market.

The AfCFTA, which came into force in January 2021, is touted as Africa’s Marshall Plan with a potential to lift 100m Africans out of poverty and contribute US$450bn to Africa’s GDP by 2035, according to a report by the World Bank.

Said Adejumobi (pictured), director Strategic Planning Oversight and Results Division at the Economic Commission for Africa, said there “will be challenges along the way” urging countries to see the single market as an opportunity to grow their economies.

“For us to be able to benefit from the AfCFTA, we need to know what our comparative advantages and we need to be able to compete in the regional market,” Adejumobi said.

He said an adjustment fund has been created to cushion members against potential revenue losses after opening up their economies.

Recently, the AfCFTA Secretariat, Afreximbank and Rwanda signed the host country agreement for the adjustment fund which will be based in Kigali.

The signing of the host country agreement paves way for the operationalisation of the Fund.

Adejumobi said it was key for countries to improve their productive capacities to benefit from the AfCFTA.

Last year, the AfCFTA Secretariat launched the Guided Trade Initiative to allow commercially meaningful trading under the single market through matchmaking businesses and products for export and import between interested State parties in coordination with their national AfCFTA implementation committee.

The Guided Trade Initiative was used to test the operational, institutional, legal and trade policy environment under the AfCFTA and to send a positive message to the African economic operators.

The initiative began with the participation of eight countries—Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia.

The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union and eight regional economic communities. Of the countries, 54, inclusive of Zimbabwe, have signed the agreement will 46 have deposit instruments of ratification. The AfCFTA will create a market with a population of about 1.3bn and a combined GDP of over US$3trillion.

It seeks to eliminate trade barriers and boost intra-Africa trade which is at about 15%. The AfCFTA is also touted to contribute to establishing regional value chains in Africa, enabling investment and job creation.

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