reasons why Africa's new free trade area is a global game changer subscribe and like this chann

Reasons why Africa's new free trade area is a global game changer

To overcome many current challenges, and to build back better in the wake of COVID-19, now is the time for more trade and greater cooperation. If fully implemented, what would this exciting new agreement bring to Africa and to the world?
1. The AfCFTA will significantly reduce poverty
According to a recent report by the World Bank, the pact will boost regional income by 7% or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035. Wages for both skilled and unskilled workers will also be boosted by 10.3% for unskilled workers, and 9.8% for skilled workers.
The AfCFTA highlights the significant and increasing commitment of the African Union to reducing poverty through trade – a link that is increasingly recognized. As Ngozi Okonjo-Iweala, candidate for the WTO Director General, recently stated: “Trade is a force for good, and properly harnessed can help lift millions out of poverty and bring shared prosperity.”
2. Positive economic outcomes will be many and varied
Diversifying exports, accelerating growth, competitively integrating into the global economy, increasing foreign direct investment, increasing employment opportunities and incomes, and broadening economic inclusion are just a few of the positive economic outcomes AfCFTA can bring.
It is estimated that the agreement will increase Africa’s exports by $560 billion, mostly in manufacturing. Intra-continental exports would also increase by 81%, while the increase to non-African countries would be 19%. According to Mo Ibrahim Foundation, if successfully implemented, AfCFTA could generate a combined consumer and business spending of $6.7 trillion by 2030. Furthermore, markets and economies across the region will be reshaped, leading to the creation of new industries and the expansion of key sectors. Significantly, it would make African countries more competitive globally.
3. Women stand to gain
The AfCFTA clearly focuses on improving the lives of women. There is a risk that some of the economic gains made by women through trade could be reversed by the COVID-19 crisis. According to the Economic Commission for Africa, women account for around 70% of informal cross- border traders in Africa. Through such work, women can be vulnerable to harassment, violence, confiscation of goods and even imprisonment. Tariff reductions under the AfCFTA will enable informal women traders to operate through formal channels, bringing better protection. Furthermore, a growing manufacturing sector would provide new job opportunities, especially for women.
As AfCFTA Secretary-General Wamkele Mene stated, “It [the AfCFTA] will be the opportunity to close the gender income gap, and the opportunity for SMEs to access new markets”. This is significant, since small and medium-sized enterprises account for 90% of jobs in Africa.
4. Trade integrity will be centre-stage
The AfCFTA offers an opportunity to promote good governance both globally and across Africa, through the concept of “Trade Integrity” – defined as international trade transactions that are legitimate, transparent and properly priced – as a way to ensure the legitimacy the global trading system. The prevalence of illegally-procured or produced goods (for example, illegal mining or fishing, or goods resulting from child or forced labor), misinvoiced trade transactions (i.e. trade fraud) and opacity in most free trade zones strips governments of revenues – needed now more than ever before to assist with the pandemic response, undermines fair labor standards and human rights, and obfuscates who is involved in trade transactions and what goods are being traded, which can facilitate transnational crime.
5. The negative impacts of COVID-19 will be cushioned
The pandemic is expected to cause up to $79 billion in output losses in Africa in 2020. The African Development Bank Group’s African Economic Outlook (AEO) 2020 Supplement estimates that Africa could suffer GDP losses in 2020 between $145.5 billion (baseline) and $189.7 billion (worst case), from the pre-COVID–19 GDP estimates. Further, trade in medical supplies and food has been disrupted. It is being fully recognized across the continent that AfCFTA presents a short-term opportunity for countries to “build back better” and cushion the effects of the pandemic. In the longer-term, the pact will increase the continent’s resilience to future shocks.
https://www.weforum.org/agenda..../2021/02/afcfta-afri