The African Continental Free Trade Area (AfCFTA) could support the regional income by 7% ($450 billion) and help uplift over 30 million people out of extreme poverty by 2035, provided multiple policy reforms and trade-facilitation measures are taken, according to a World Bank report.
The report mentioned the African continent making significant progress in the last few decades in controlling poverty and improving the living standards by enhancing productivity and creating ample job opportunities. The Africa-wide free-trade pact has gained over $292 billion from trade reforms, which includes a reduction in red tape, compliance costs, and enabling the integration of African businesses into global supply chains.
In the report, the World Bank stated that the coronavirus pandemic is the cause of major disruptions in trading across the continent, which includes the mobility of critical goods like food and medical supplies, and that majority of AfCFTA’s income gains coming from measures like cutting the red tape and ease of custom procedures. Achieving the gains will help fighting the economic damage by the pandemic, which is expected to cause up to $79 billion in output losses in Africa this year.
The agreement also aims at helping change the internal trade in Africa (15%) by reducing or eliminating cross-border tariffs on 90% of goods, enabling the movement of capital and people, promoting investment and makings way for a continent-wide customs union.