Free trade among African countries poses great potential in drawing more foreign direct investments and increasing benefits, according to World Bank.
To attain this, it says trade agreements like the African Continental Free Trade Agreement (AfCFTA) need to be fast-tracked since trade between African borders still faces restrictive constrains which limit growth.
“According to our new research on trade integration, it is noted that borders between African countries rank among the most restrictive in the world, one reason why there is relatively little intra-continental trade and investment,” the lender says.
AfCFTA was adopted in March 2018, with May 30, 2019 marking the date of its entry into force.
At that time, 24 countries had deposited their instruments of ratification.
By last May, there were 54 signatories of which 43, had deposited their instruments of ratification.
So far Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia are participating in AfCFTA’s Guided Trade Initiative (GTI), representing five regions across the continent.
The global lender maintains that trade and investment have been the primary drivers of growth for developing economies, lifting hundreds of people out of poverty, hence the need for governments to focus on easing intra-trade across the continent.
AfCFTA is fully rolled out would create a single, continent-wide market that unites 54 countries with a combined population of 1.3 billion and GDP of $3.4 trillion (Sh423.8 trillion).
It would also reduce barriers to trade and investment and boost competition, raising the attractiveness of Africa for regional value chains and to investors, the lender says in part.
The first phase of the agreement that took effect in January 2021, would gradually eliminate tariffs on 90 per cent of goods and reduce barriers to trade in services.
That alone would expand trade and could raise real income by about seven per cent by 2035.
