Briefs on International Trade (BIT) 2022/[10] - Department of Commerce

29th July 2022

The African Continental Free Trade Area (AfCFTA) agreement created the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product valued at US$3.4 trillion. The agreement will reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. Full implementation of AfCFTA would reshape markets and economies across the region and boost output in the services, manufacturing and natural resources sectors.

The African Continental Free Trade Area (AfCFTA) was conceptualized in 2012 to enhance trade integration on the continent. The Agreement establishing AfCFTA came into force on 30 May 2019 and, so far, 30 countries on the continent have ratified the Agreement.

As proposed, the new free trade area will enhance the intra-continent trade among the members as well as the exports of the African continent to the world. Currently most of the natural resources of the continent are excavated by the American, European and Asian multinationals while the rest of the resources are underutilized due to many political, economic and other reasons. Thus, the people in the continent could not join the global value chain, and as a result, their average living standards are always below the global averages in last few decades.

Africa's Trade with the World

(Values in USD Bn)

Region Imports 2021 Exports 2021
Asia 261.4 182.6
Europe 194.2 200.1
USA 52.1 46.1
China 115.8 78.0
BRICS (Except South Africa) 170.8 112.7

Source: Trade Map

According to the above statistics the volume of international trade of the African continent is relatively lower than the other parts of the world. Unlike Asia, Europe, and North America, Africa does not have an economy that acts as a trading hub. South Africa operates, somewhat, as a hub for the Southern Africa, for which it is also a key supplier of intermediate goods. South Africa is a top-five trading partner for 14 African countries. At the same time, it is integrated, mostly upstream (forward integration), in global value chains with China, the United States, Germany, and India. The rest of Africa lacks a systemic global exporter that also imports value added from the rest of the continent. The development of the supply chains within the continent would provide a bridge for African countries to generate more downstream (backward) integration into global value chains and by doing so get more gains from their participation in international trade.


Briefs on International Trade (BIT) 2022/[08](PDF)

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