By KWANELE DHLADHLA | 2020-08-02
COVID-19 might have resulted in the loss of 9 000 jobs in the kingdom but there is a glimmer of hope for economic resuscitation.
The African Continental Free Trade Area (AfCFTA) presents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion, a new World Bank report has found.
If implemented fully, the trade pact could boost regional income by seven per cent or $450 billion (over E5 trillion), speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035, reported the World Bank in its official website.
The agreement establishing the AfCFTA entered into force on May 30, 2019 for the 24 countries that had deposited their instruments of ratification which included Eswatini.
The report, as published by the World Bank and shared by the Trade Law Centre (TRALAC) suggested that achieving these gains would be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which was expected to cause up to US$79 billion in output losses in Africa in 2020.
It was noted that the pandemic has already caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food.
The World Bank pointed out that most of AfCFTA’s income gains were likely to come from measures that cut red tape and simplify customs procedures.
“Tariff liberalisation accompanied by a reduction in non-tariff barriers - such as quotas and rules of origin - would boost income by 2.4 per cent, or about $153 billion. The remainder - $292 billion - would come from trade-facilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade, and make it easier for African businesses to integrate into global supply chains,” the World Bank reported.
It was pointed out that successful implementation of AfCFTA would help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs.
In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries. By replacing the patchwork of regional agreements, streamlining border procedures, and prioritising trade reforms, AfCFTA could help African countries increase their resiliency in the face of future economic shocks. It has been mentioned that the AFCFTA has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans.
“The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers - women and men, skilled and unskilled - across all countries and sectors, ensuring the agreement’s full benefit,” said Albert Zeufack, the World Bank’s Chief Economist for Africa.
According to the report, the agreement would reshape markets and economies across the region, leading to the creation of new industries and the expansion of key sectors. Overall economic gains would vary, with the largest gains going to countries that currently have high trade costs.
The 30 countries that have ratified the AfCFTA Agreement were Ghana, Kenya, Rwanda, Niger, Chad, Congo Republic, Djibouti, Guinea, Eswatini, Mali, Mauritania, Namibia, South Africa, Uganda, Ivory Coast (Côte d’Ivoire), Senegal, Togo, Egypt, Ethiopia, The Gambia, Sierra Leone, Saharawi Republic, Zimbabwe, Burkina Faso, São Tomé and Príncipe, Gabon, Equatorial Guinea and Mauritius.
Cameroon and Angola officially approved ratification of the AfCFTA Agreement on October 31, 2019 and April 28, 2020, respectively. Deposit of these instruments of ratification is still pending.
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