(Ecofin Agency) - The operation of the African Continental Free Trade Area (AfCFTA) could increase the gross domestic product of member countries by 1% to 3%, according to the latest report of the UN Conference on Trade and Development published June 26.
“If the agreement is fully implemented, the gross domestic product of most African countries could increase by 1% to 3% once all tariffs are eliminated […] The AfCFTA is also expected to boost intra-African trade by 33%,” the report notes.
UN Economic Commission for Africa (ECA) estimates the free trade zone could improve intra-African trade by 52.3%. Africa is still a minor player in intracontinental trade. Such exchanges only make 15% of total trade on the continent while it is 67% in Europe.
UNCTAD found the AfCTFA will not only attract foreign investments but also create opportunities that foster African industrialization through improved regional value chains.
The Free Trade Zone entered into force last May 30, after Sierra Leone and Sahrawi Arab Democratic Republic signed the agreement. This made a total of 22 countries ; the minimum number required to launch this agreement that is expected to create a single market (1.2 billion consumers).
AfCTFA will officially be launched on July 7 by the African Union during the coming summit in Niamey, Niger.