Everything you need to know about African Continental Free Trade Area

The long awaited African Continental Free Trade Area (AfCFTA) is finally here. Trading commenced on January 1, 2021. This marks a celebrated milestone for intra-Africa trade .

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The Pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

Global Director of Trade, Investment and Competitiveness of the World Bank summarized its potential stating, “ Creating a single, continent-wide market for goods and services, business and investment would reshape African economies. The Implementation of AfCFTA would be a huge step forward for Africa, demonstrating to the world that it is emerging as a leader on the global trade Agenda

It was ratified by 31 African Union Member States : Algeria, Angola, Burkina Faso, Cameroon, Chad, Republic of Congo, Cote d’Ivoire, Djibouti, Egypt, eSwatini, Equatorial Guinea, Ethiopia, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Mauritius, Namibia, Niger, Rwanda, Saharawi Republic, Sao Tome & Principe, Senegal, Sierra Leone, South Africa, The Gambia, Togo, Uganda and Zimbabwe.

Key Findings :

  • Lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day;
  • Boost Africa’s income by $450 billion by 2035( a gain of 7 percent) while adding $76 billion to the income of the rest of the world
  • Increase Africa’s exports by $560 billion , mosyly in manufacturing .
  • Spur larger wage gains for women (10.5percent) than for men(9.9 percent).
  • Boost wages for both skilled and unskilled workers- 10.3 percent for unskilled wokers, and 9.8 percent for skilled workers
  • AfCFTA eliminates tariffs on 90 per cent of goods produced on the continent
  • Tackles non-tariff barriers to trade
  • Guarantees the free movement of persons

In terms of poverty:

  • West Africa would see the biggest decline in the number of people living in extreme poverty – a decline of 12 million (more than a third of the total for all of Africa).
  • Central Africa would see a decline of 9.3 million
  • Eastern Africa would see a decline pf 4.8 million
  • Southern Africa would see a decline of 3.9 million.
  • Countries with the highest initial poverty rates, would see the biggest declines in poverty rates.
  • In Guinea-Bissau, the rate would decline from 37.9 percent to 27.7 percent
  • In Mali the rate would decline from 14.4 percent to 6.8 percent.
  • In Togo, it would decline from 24.1 percent to 16.9 percent

For those looking to harness AfCFTA’s potential both within Africa and looking to enter the African Market from abroad, the Tax and Investment Desk of Centurion Plus is launching the AfCFTA Impact Report, which will provide critical business impact assessment, especially for multinational companies and investors conducting business in Africa under AfCFTA protocols.

The Impact Report entails:

  • AfCFTA’s impact on movement and provision of goods and services and the respective taxation outcomes
  • Business optimization opportunities
  • Customs and immigration
  • Employment, including movement of personnel and potential changes in permit laws and regulations
  • Intellectual property
  • Trade and investment advantages
  • Potential anti-trust and market access issues
  • Potential environmental obligations
  • Legal issues surrounding mergers and acquisitions
  • Dispute resolution

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