Africa strives to be largest free trade area with GDP of $3trn

Africa strives to be largest free trade area with GDP of $3trn The Africa Export-Import Bank (Afreximbank) says Africa will be the biggest free trade area in the world with a Gross Domestic Product (GDP) of three trillion dollars.
The President, Board of Directors, Afreximbank, Prof. Benedict Oramah, made the assertion at the opening of the Agriculture Summit Africa 2021 hosted by Sterling Bank on Wednesday in Lagos.
Oramah said this could be achieved on the backs of proper and successful implementation of the Africa Continental Free Trade Agreement (AfCFTA) that would create a single market for over one billion consumers in the continent.
Oramah, delivered a keynote address on The Green Mile – AfCFTA, Trade and Africa’s Agribusiness Economy- Discussing the policy framework and funding opportunities for Financial Institutions.
He was represented by Mr Ibrahim Sagna, Global Head/Director of the Advisory and Capital Market, Afreximbank.
Oramah said the AfCFTA was a treaty that will transform Africa from its fractured commodity dependent growth of economies into a vibrant integrated market of over 1.2 billion people.
According to him, establishing the AfCFTA and it’s counterparts, with the commencement of trade will drive and deliver sustainable solutions to the needs of African countries.
He said this agreement presented a major opportunity for African countries to bring 30 million people out of extreme poverty and raising 68 million who live with less than five to 50 dollars per day.
Having a strategy of interventions to regulate the external manipulation of currency is critical. It is evident that technology will be a highly significant factor in the success or failure of African exports.
“Governments and financial institutions should more aggressively pursue the approach of strengthening the IMS multi-lateral surveilence role to directly combat this issue.
“The AfCFTA depends on approvals and implementation and especially raising the dear agriculture sector, it is in agriculture that the continental free trade aspirations can be actualised especially by strengthening the regional value streams integrated into priority products led by diverse private sectors inspired by small business owners, commercial finance, miners and operators.
“If successfully implemented, the continental free trade will create a single African market for over a billion consumers with a total GDP of three trillion dollars which will make Africa the largest free trade area in the world,” he said.
Oramah further stated that the tariff rate on African goods was relatively lower entering European Union and the U.S. markets making exports to these two countries more lucrative than exporting to other African countries.
He added that COVID-19 had a disastrious result all around the globe and for Africa, it revealed inefficiencies across various industries like health, logistics, food, mainly issues around vaccines affordability and availablity.
According to him, this encouraged the need for laying the foundation for a structured way for African countries to manage their own circumstances in the future by supporting intra-African trade to boost regional development.
He said the AfCFTA committed countries to remove tariff on 90 per cent of goods progressively raising trade, services and addressing a host of non-tariff barriers.
He explained that AfCFTA, will work similarly to how the European Union functions, as the agreement was designed to be continental and economic growth of sovereign nation states so a lit of similarities can be borrowed.
He said: “The Afreximbank, AfCFTA and trade minister partnered to roll out an adjustment fund for countries that may record new loss arising from this liberalisation and it will support the private sector to adjust to the new trading environment established under the agreement.
“The amount required for the adjustment is estimated at eight billion dollars and Afreximbank is proud to have donated one billion U.S. dollars.
“The bank is proud to be contributing to Africa’s integration and to achieve this, the bank has developed a number of financing and facilitation instruments to support intra-Africa trade and one of such is the intra-African trade fair bi-annual event to connect buyers and sellers across the continent, addressing access to trade and investments.
“Some of the critical solutions that will be showcased by the bank include the African trade gateway, a digital ecosystem that facilitates intra-Africa trade that eliminates it’s challenges around complexities of payment across Africa.
“Despite the delay due to the pandemic, the bank has been working with the African Union and the secretariat of the AfCFTA to facilitate the implementation of the agreement.
“We have already disbursed close to 20 million dollars of intra-Africa trade during the last four years and will double this amount in the coming years,” he noted.