The World Bank says the successful implementation of the African Continental Free Trade Area (AfCFTA) would offer a vital recovery from the Coronavirus outbreak.
The African continent has not been spared the rage of the pandemic which set out last year with economic growth for Africa projected to decline from 2.4 percent in 2019 to between -2.1 percent to -5.1 percent in 2020, according to the World Bank.
This meant the first economic recession for Africa in the past quarter of a century with the World Bank further projecting the pandemic would cost Africa US$37 billion and US$79 billion in terms of output losses for 2020.
“A successful implementation of AfCFTA would be crucial. In the short term, the agreement would help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs. In the longer term, AfCFTA would allow countries to anchor expectations by providing a path for integration and growth-enhancing reforms,” the World Bank said in a report.
The Breton Woods institutions add that the coronavirus pandemic is currently resulting in increased food insecurity in Africa amid slowdowns in demand and supply chains.
“In Sub-Saharan Africa, this will disproportionately impact household welfare as a result of price increases and supply shortages. Welfare losses would amount to 14 percent relative to the no-COVID-19 scenario if countries were to close their borders to trade”
“Furthermore, border closings, which were intended to stop the importation of the virus to other countries, have disproportionally affected the poor, particularly small-scale cross-border traders, agricultural workers, and unskilled workers in the informal sector,” the World Bank said.
“It is for these reasons that the Breton Woods institution sees an advantage in the continental trade deal which will create the largest free trade area in the world, measured by the number of countries participating, saying it will boost trade and other economic activities to help countries come back to a path of growth,” the Bank added.
Trading on the AfCFTA was tipped to start on July 1, 2020, but suffered a setback as a result of the novel Coronavirus pandemic leading to the suspension of negotiations.
The Intra-African trade pact would witness 90 percent of all goods traded enjoy a tariff-free regime from January 1, 2021, for all countries that have signed agreements and deposited their instruments of AfCFTA ratification.
With some 54 out of 55 African countries participating in the single trade market pact, the AfCFTA would have the largest number of member countries in any trade deal since the formation of the World Trade Organization.
Accra, Ghana currently serves as the Secretariat of AfCFTA and was commissioned and handed over to the African Union by President Nana Addo Dankwa Akufo-Addo on August 17, 2020, in Accra.