Private Sector perspectives on the African Continental Free Trade Agreement
Moving into 2022, the outlook for the African Continental Free Trade Area (AfCFTA), according to a recent survey by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC), will be largely shaped by private sector perceptions, optimism and motivation for engaging with cross-continental agreement. The survey synthesises responses from over 400 African CEOs across 46 different countries, and helps to illuminate the state of current business sentiment for AfCFTA’s ability to reduce at least 90 percent of tariffs (progress is sitting on roughly 88%), accelerate intra-African trade, and facilitate economic development. According to the results, 87% of respondents believe there will be a substantial increase in intra-African trade under the agreement, a vast majority, however, continue to remain in the dark on where to access useful information, such as the new rules, regulations, resources and updates.
Accessibility must be met with the path towards digitalising the continent, with many respondents highlighting the functionality of the internet, social media, government websites, and private sector hubs as critical channels for information. For example, online platforms for buyers/sellers, online workshops and resource-centres, and authorised cross-border payment facilities are some of the most requested policy interventions. The results also indicate several lingering impediments to intra-African trade, including finding access to financing, sourcing new opportunities hampered by the pandemic, inadequate national policy, weak transport and infrastructure, and poor tariff transparency, all of which affect particular regions differently. Some countries have experienced improvements in total exports and have noted gaining access to countries they ‘have not traded with a lot in the past’ despite sharing the same continent. Conversely, CEOs across regions like Central Africa have indicated weaker optimism, reflecting the region’s relatively weaker economic growth.
Other recommendations for the coming year have highlighted the need to reach the 90% benchmark for settling Rules of Origin and harmonising supplementary trade systems as efficiently as possible for reaping full benefits of the AfCFTA. Prioritising sub-regional trade corridors and interconnectivity, such as the Abidjan to Lagos trade corridor in the ECOWAS region, is integral for progressive step-making in the agreement’s roadmap to success. Additionally, some hesitation for ratification lingers in countries whose economies have been reliant on exports to non-African countries. Advancing the agreement a year after its implementation is, therefore, centered not only on a number of accessibility issues but also an inability to diversify export portfolios away from predominantly commodities. To learn more about PAFTRAC, you can access their website here.