The African Continental Free Trade Area: Potential Economic Impact and Challenges
Staff Discussion Notes, May 13, 2020
Source details
- Canonical URL
- The African Continental Free Trade Area: Potential Economic Impact and Challenges
Other formats
Bibliographic details
- Authors: Lisandro Abrego, Mario de Zamaroczy, Tunc Gursoy, Garth P. Nicholls, Hector Perez-Saiz, Jose-Nicolas Rosas
- Published: May 13, 2020
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781513542379.006
Overview
- Political momentum towards Africa-wide free trade has been intensifying.
- In March 2018, over 40 countries signed the African Continental Free Trade Area (AfCFTA) agreement.
- Once fully implemented, the AfCFTA is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion.
- This Staff Discussion Note (SDN) takes stock of recent trade developments in Sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA, as well as challenges to its successful implementation.
Potential economic benefits
- Increased trade flows in both existing and new products.
- Higher income arising from:
- increased efficiency and productivity from improved resource allocation,
- higher cross-border investment flows,
- technology transfers.
- Potential for substantial economic benefits for African countries beyond tariff reduction.
Implementation challenges and trade-policy priorities
- Lowering import tariffs alone will be insufficient to realize full benefits.
- Key non-tariff constraints to address:
- inefficient customs procedures,
- wide infrastructure gaps,
- poor business climates.
- Need for policy measures to mitigate differential impacts of trade liberalization as resources reallocate and activities migrate to locations with comparatively lower costs.
Subject areas and keywords (as listed)
- Subject: Employment, International trade, Labor, Revenue administration, Tariffs, Taxes, Trade barriers, Trade facilitation, Trade liberalization
- Keywords: AfCFTA, AfCFTA agenda, AfCFTA agreement, AfCFTA benefit, AfCFTA secretariat, AfCFTA study, AfCFTA welfare, Africa, CGE trade model, Employment, general equilibrium, Global, inequality, net effect, North Africa, preferential trade arrangement, reform strategy, SDN, Southern Africa, structural reforms, Sub-Saharan Africa, Tariffs, Trade barriers, trade creation, trade diversion, Trade facilitation, trade growth, Trade liberalization, trade openness, welfare
Content in this bundle
- Staff Discussion Note