The African Continental Free Trade Agreement (AfCFTA) is a comprehensive initiative that aims to create an integrated, continent-wide free trade zone. Spanning 54 countries and encompassing a population of 1.3 billion people, the AfCFTA holds tremendous potential, with GDP revenue exceeding US$3.4 trillion.
According to the World Bank, the implementation of AfCFTA is projected to increase regional income by 9%, or US$450 billion, lifting 50 million individuals out of extreme poverty by 2035. Additionally, the Mo Ibrahim Foundation estimates that by 2030, the agreement could generate combined consumer and business spending of $6.7 trillion.
If successfully implemented, the AfCFTA is expected to generate numerous benefits, such as job creation, economic growth and opportunities for businesses to participate in regional and global value chains. It also has the potential to attract foreign investment, thus serving as a transformative force for the continent and driving sustainable socioeconomic development with a focus on inclusivity. Digital technology will play a vital role in supporting these efforts.
Moreover, the AfCFTA aims to accelerate cross-border trade and foster digitalization throughout Africa, encompassing areas such as online logistics, e-commerce and data transfer. Digital technologies like broadband connectivity, automated processing and the Internet of Things (IoT) will be crucial for facilitating smooth cross-border trade. Consequently, investments in digital infrastructure are necessary to establish a robust digital trading bloc.
Collaboration between member countries is vital for the success of the AfCFTA. The initial phase of the agreement, effective since January 2021, focuses on gradually eliminating tariffs on 90% of goods and addressing trade barriers in services. However, ongoing negotiations are still underway for trade-in services, additional protocols on investment, competition policy, intellectual property rights and e-commerce.
Specifically, the AfCFTA aims to liberalize five service sectors classified by the World Trade Organization (WTO): business services, communication services, financial services, tourism and travel, and transport services. However, there is currently a lack of clarity regarding the extent and sub-sectors within these services that will be liberalized.
The pending finalization of the AfCFTA presents an opportunity for the private sector, including telecommunications operators and technology companies, to engage with governments and authorities. By providing input, leveraging expertise and supporting digitalization efforts, we can maximize the scope and possibilities of the agreement.
