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conditions for Success in the Implementation of the AfCFTA

11 February 2020

Source: tralac.org

For full access to the Study

This particular study – AfCFTA conditions for Success – provides both an analytical framework as well as an actual analysis on local and international factors likely to either augment or hinder implementation of the AfCFTA, and therefore gives an evidence-based understanding and capacity to make specific local policy and investment decisions. The study can further guide interventions aimed at strengthening and aligning related institutional and human capital needs using integrated, cross-sector and transboundary approaches. Using the International Futures Modelling Tool, the study presents, for planners, policy makers and development specialists, a uniquely African perspective and foresight analysis to help in evidence-based prioritization and determining of national or regional AfCFTA implementation pathways – also connecting between individual and collective (regional) Member States’ implementation efforts. Success of the AfCFTA is cardinal to the success of Agenda 2063.

Tariffs: Today, Central African Republic, Chad, Comoros, and Democratic Republic of the Congo are all estimated to depend on intra-African tariffs for more than 5% of total government revenue. Figure 3 shows that at its peak in 2025, 24 countries are projected to experience net losses in revenue greater than 1% relative to the Current Path. These intra-African tariff-dependent countries are likely to face a challenging period of adjustment over the medium term. However, most countries that experience net revenue losses also quickly enjoy GDP gains that fully offset those losses.

At the continental level, by the mid-2030s, total gains surpass and begin to rapidly outpace losses, such that by 2063 African economies are projected to receive an additional $500bn in annual revenue relative to a scenario without AfCFTA. This value is roughly 140 times the amount necessary to compensate the few countries that do not fully make up tariff revenue losses. In addition, while countries heavily dependent on intra-African trade tariff revenues will see short-run disruptions to government revenue generation, they also experience much greater long-term economic gains relative to countries that have less of a short-run dependence on trade tariff revenue.

While the GDP and revenue gains suggested by this analysis are more than enough to outweigh the losses, since intra-African tariffs are already relatively low, their removal alone may not be enough to generate transformative change and significantly increase intra-African trade.

 

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The Pan African Chamber of Commerce and Industry was established in 2009 by 35 founding national business chambers to influence government policy and create a better operating environment for business.

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