Nine in 10 African chief executives have confidence the actualisation and adoption of the free trade agreement will boost intra-African trade, a new survey shows.
A survey by the Pan-African private sector trade and investment committee (PAFTRAC) revealed that 93 percent of the executives from small and medium-sized enterprises (SMEs) sampled across Africa were confident the free trade agreement would improve economic activities on the continent.
In March 2018, African countries signed the African Continental Free Trade Area (AfCFTA), which commits countries to remove tariffs on 90 percent of goods and address a host of other non-tariff barriers.
“Our survey clearly shows that the vast majority of African CEOs believe that the implementation of the AfCFTA will have a positive effect on the levels of intra-African trade, even as early as 2022-23,” the report read in part.
“A total of 93 percent were confident to some extent that it would have a positive impact, with 25 percent describing themselves as very confident.”
Last month, Kenya shipped its first consignment of locally made batteries to Ghana, two months after it was picked among seven countries to pilot the continental free trade area.
Upon successful implementation, the agreement will create a single African market of more than a billion consumers with a total GDP past $3 trillion, making Africa the largest free trade area in the world in terms of population and geographical size.
As much as the continental leaders are gearing for liberalisation, about four percent of the participants believe the AfCFTA will have, or has already had, a negative impact on their businesses.
“[This is] largely motivated by concerns that the erosion of trade barriers and other forms of protectionism will open up previously sheltered sectors to competition,” says the report.
The agreement reduces the cost of cross-border trade and investment by lowering and eliminating custom duties, tariffs, and non-tariff barriers, hence increasing the potential of specialisation and scale.
The respondents said the trade pact would open up new markets to export their goods and services (19.6 percent), help export regionally (16.8 percent), encourage investments (14.6 percent), create industrial hubs (14.6 percent) and reduce the cost of doing business (12.3 percent).