Last week, leaders of 44 African nations committed to launching an ambitious regional trade bloc, designed to sweep away barriers to intra-African commerce and provide a shot in the arm to economic growth. But although the creation of the African Continental Free Trade Area (AfCFTA) is almost certainly good news for the world’s poorest continent, quite how beneficial it will prove to be is open to debate. The African Union (AU) argues that the pact has the potential to increase intra-African trade by 53% by eliminating import duties, which average 6.1%, and to more than double trade if non-tariff barriers are also reduced. As impressive as this sounds, though, Unctad, the UN’s trade and development arm, estimates the total annual welfare gain would be just $4.6bn, or 0.2% of continental GDP, even if all tariffs were scrapped, although this would rise to $16.1bn, 0.7% of GDP, if unfettered cross-border investment were also permitted. Moreover, even the first of these scenarios is not...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.