With Nigeria and Benin signing the African Continental Free Trade Agreement (AfCFTA) in July 2019, 54 of the 55 African Union member states have become part of the Africa Continental Free Trade Area, the largest in the world by number of countries after the World Trade Organization.
The goal of the agreement is expanding intra-African trade and creating a single continental market for goods and services. This will include free movement of business persons and investments and the eventual establishment of a continental customs union. It also aims to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better resource.
The Free Trade Area will encompass a combined population of 1.2 billion people and a combined GDP of over $3.4 trillion. Its total population is expected to double by 2050 according to recent United Nations forecasts. With an expanding middle class - about 43% by 2030 - there will be a significantly higher demand for goods and services. Africa's combined consumer and business spending is expected to reach $6.7 trillion by 2030.
Creating a single continental market for goods and services makes Africa a powerful economic force and a prized investment destination. For General Electric Co. (GE) and a number of private-sector players both regional and multinational, this is great news. Over the years we have made efforts to localize our supply chains and encourage global GE suppliers to invest in Africa. Free movement of goods, services and people across the continent makes this a huge opportunity and a considerably more attractive proposition.
The AfCFTA aims to drive intra-African trade, which in 2018 stood at 16% of total African trade. If properly implemented this could potentially increase 52.3% by 2022, the United Nations Economic Commission for Africa (UNECA) has said. Considering that 42% of intra-African trade is made up of manufactured goods, such a significant increase could lead to increased industrialization opportunities and growth of the manufacturing sector, creating employment and increasing prosperity.
Infrastructure development would play an important role. On the one hand, the AfCFTA provides new opportunities for investment in infrastructure. On the other hand, significant investment in developing infrastructure will be critical to its success. The African Continental Free Trade Area creates an urgent need for...