Roundup: AfCFTA can address Africa's trading perils: expert

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ADDIS ABABA, Jan. 6 (Xinhua) -- The African Continental Free Trade Area (AfCFTA) can address Africa's trading perils associated with the continent's fragmented markets, a senior Africa Trade Policy Center (ATPC) official said on Wednesday.

"Today, the African markets are quite fragmented which undermines the competitiveness of its economies," David Luke, Coordinator of the ATPC at the United Nations Economic Commission for Africa (UNECA), told Xinhua on Wednesday.

"The fragmentation of the markets could be addressed under the AfCFTA by progressively eliminating tariffs, removing non-tariff barriers on intra-African trade, and increasing industrial capacities," Luke said.

Noting that the continental free trade pact creates a single continental market for goods and services, the ATPC coordinator stressed that the free trade accord "goes beyond a traditional free trade area and covers not only goods and services but also investment, intellectual property rights, competition policy, and e-commerce."

The AfCFTA Agreement, which was launched in March 2018 in the Rwandan capital city of Kigali, took effect last Friday. It has so far gathered 54 African Union member signatories, except Eritrea.

The African continent on January 1 officially started trading under the AfCFTA, drawing greater expectations towards continental integration and larger continental market; and offering new hope of continental exhilaration in terms of boosting intra-African trade, and eventually facilitating Africa's development and industrialization.

The accord has the potential to boost intra-Africa trade by more than 52 percent by the year 2022, according to theUNECA.

According to the ATPC, the expected integrated market as a result of the free trade pact "is likely to create a conducive environment for efficiency gains from economies of scale, increased competitiveness, better access to and efficient use of resources, including labour, capital and technologies."

"These will contribute to greater diversification of African economies, stimulate the development of regional value chains, and promote intra-African trade, which can be leveraged as a catalyst for developing African multinationals and creating job prosperity," said Luke.

Luke's assertion was echoed by a recent UNECA study which noted that a reduction of tariffs under the AfCFTA would increase Africa's production and trade.

According to the study, the value of intra-African trade will potentially increase by around 15 percent to 25 percent by 2040 compared to a scenario without AfCFTA in place.

It is also expected that industrial products would increase the most, with gains ranging from 25 percent to almost 30 percent.

The increase for agriculture and food products would range between 20 percent and 30 percent; and for energy and mining products it would be between 5 percent and 11 percent, according to the study.

"This holds considerable potential for generating much-needed employment opportunities across the continent and transforming African economies through inclusive and sustainable trade and development," according to the ATPC coordinator. Enditem

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