I was recently in Anantarivo, Madagascar for the 11th Private Sector Forum organised by the African Union Commission and its partners, in which one of the central themes was the African Continental Free Trade Agreement (AfCFTA). The AfCFTA, a landmark milestone on its own terms, was entered into agreement on 21 March 2018 by African leaders and ratified by 28 African countries.
However, there is a worrying lack of understanding among policy-makers and scholars about what the AfCFTA implies and demands. Instead, there is currently a sense of overblown euphoria about what it will achieve. Gains for the continent’s economic transformation may in fact be partial.
The outcome of the AfCFTA will depend on whether African countries embrace industrialisation and focus on increasing their productive capabilities in a highly competitive global landscape. Currently, intra-Africa trade is limited to 15% of Africa’s total trade, indicating that the intra-regional value chain is very weak in contrast to Asia, where it stands at 80%. The trade volume in Africa is also constrained by the relatively slow economic growth in the continent, which averages 4.6% since 2000 in contrast to Asia’s 7.4%.