A successful African free trade area implementation could unlock major benefits for Africa in terms of income, jobs among other things, a report by IMF staff said.
The departmental paper published Friday (May 5) examined the prospects for African trade integration in the context of a changing world amid the climate crisis, risks of geopolitical fragmentation, technological progress, and the continent’s prospective demographic growth.
The 64-page document found that comprehensive reforms combined with the AfCFTA implementation could increase the median merchandise trade flow between African countries by 53 percent and with the rest of the world by 15%.
This would consequently raise the real per capita GDP of the median African country by over 10 percent.
Such performance resonates with findings in the literature that trade reforms could help reduce extreme poverty by an additional 30–50 million people across the continent.This result resonates with findings in the literature that trade reforms could help reduce extreme poverty by an additional 30–50 million people across the continent.
The authors of the report said these opportunities would require investment in physical and human capital, a macroeconomic and business environment conducive to private sector-led growth, and a modernized social safety net that supports the most vulnerable.
The Afcfta agreement entered into force in 2019 but is not yet effectively implemented.