Plan to unlock African trade
Johannesburg – African heads of state and global CEOs at the recent World Economic Forum annual meeting backed the launch of the first report on how public-private partnerships can support implementation of the African Continental Free Trade Area (AfCFTA).
A new era for global business and investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialisation, all of which promote the success of the AfCFTA.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa; automotive; agriculture and agroprocessing; pharmaceuticals; transport and logistics.
AfCFTA secretary-general Wamkele Mene says: “Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise.”
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3,4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalisation in North America and Europe.
World Economic Forum president Borge Brende says the wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics.
“The forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing,” Brende says.
Given Africa’s historically low foreign direct investment relative to other regions, the report highlights sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness.
Head of regional agenda, Africa, at the World Economic Forum Chido Munyati says: “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion.”
Director and professor at the Thunderbird School of Global Management and co-chair of the World Economic Forum Regional Action Group for Africa, Landry Signé says: “These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains.”
The forum is working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.