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AfCFTA fails to boost Africa’s global trade share beyond 3% as countries trade more outside the continent

AfCFTA fails to boost Africa’s global trade share beyond 3% as countries trade more outside the continent

Business Insider Africa | 4th March 2024

By Adekunle Agbetiloye

Africa’s global trade participation still stands at less than 3%, largely driven by merchandise trade in 2023, the Economic Commission for Africa (ECA) reporton the assessment of progress on regional integration in Africa has said.

According to the report, African countries continue to conduct a greater volume of trade with countries beyond the continent rather than among themselves.

Despite advancements in monetary and financial integration, the report indicates that member states have not fulfilled the macroeconomic convergence criteria despite progress in regional integration.

AfCFTA’s impact falls short of expectations

The report stressed that despite the official commencement of the African Continental Free Trade Area agreement in 2021, the expected improvements in intra-African trade have not come to fruition.

The African Continental Free Trade Area (AfCFTA), which unites the 55 members of the African Union (AU) and eight Regional Economic Communities (RECs), is the largest free trade area in the world.

However, according to the report, the proportion of intra-African trade relative to worldwide trade decreased from 14.5 per cent in 2021 to 13.7 per cent in 2022.

The share of intra-African exports from 18.22 per cent to 17.89 per cent, and the value of intra-African imports fell from 12.81 per cent to 12.09 per cent.

The report showed that while progress has been made in the areas of roads and ICT, advancements in rail transport and energy infrastructure have been minimal largely due to challenges in securing financing.’

Africa’s still dealing with a big yearly deficit in infrastructure funding, hovering around the $130 billion to $170 billion mark.

Stephen Karingi, the Director of the Regional Integration and Trade Division at the ECA, identified unconstitutional changes in government, widespread unemployment, weak governance and pervasive poverty as the foremost challenges confronting the continent.

 source: Business Insider Africa