- The African Continental Free Trade Area (AfCFTA) has the potential to further boost exports by around 30 percent.
- Barriers such as complex and uncertain trade rules and ineffective trade facilitators remain.
- The AfCFTA will help overcome the “spaghetti bowl effect” of existing regional economic communities (RECs)
MARRAKECH, Morocco, October 11, 2023 /PRNewswire/ — Standard Chartered today published its The future of commerce: Africa report, highlighting the outlook for African trade and providing a vision of the African Continental Free Trade Area (AfCFTA) as a key promoter of optimizing intra-African trade.
The report finds that Africa total exports will reach 952 billion USD by 2035 and the AfCFTA, once fully implemented, has the potential to increase this figure by a further 29%. This represents an annual growth rate of 3 percent by 2035.
Increasing regional trade levels and greater connectivity will unlock high growth corridors across Africa and beyond. Intra-African trade is expected to reach 140 billion dollars by 2035, which is equivalent to 15 percent of Africa total exports.
Africa corridors connecting some of the world’s most dynamic regions will grow faster than the global average of 4.3 percent. The East Africa-South Asia corridor is expected to become the fastest growing major corridor, at a rate of 7.1 percent per year until 2035. Middle East–North Africa and the Middle East-East Africa corridors will also be important, with their combined trade volume expected to reach nearly 200 billion dollars by 2035.
The AfCFTA is not the first attempt made by Africa markets to promote greater cohesion, but existing agreements often have overlapping or contradictory objectives – creating a “spaghetti bowl effect”. There are eight major regional economic communities (RECs) recognized by the African Union (AU), and most AU markets are enrolled in two or more RECs, with the high costs of compliance and administration making them difficult intra-African trade.Africa less competitive trade. The AfCFTA could help overcome this problem by implementing common rules of origin, which grant the AfCFTA’s 54 members preferential trade access to their respective markets, to the extent provided for in the agreement.
Africa However, there are still obstacles to overcome to fully exploit the potential of its business opportunities. Based on a survey of more than 100 Africa Among business leaders, 63 percent surveyed said complex and uncertain trade rules are one of the main challenges to intra-African trade. 53 percent of respondents noted that underdevelopment of transport infrastructure is a major obstacle. 51 percent cited ineffective trade facilitators as another barrier, while 46 percent noted that limited and/or costly access to capital poses a challenge.
About 90 percent of respondents believe the AfCFTA can solve most of these problems. Progress has been made in this regard, with the AfCFTA taking steps to remove barriers through various initiatives, such as a reporting mechanism and a guided trade initiative to accelerate trade.(1) Between the countries.
Digitalization also plays an important role in strengthening intra-community trade.Africa trade. Report demonstrates that adoption of digital supply chain finance (SCF) solutions could unlock 34 billion USD of export value in five key African markets by 2035. Almost all (97%) of respondents are interested in digital SCF solutions, but cited resource constraints, technology gap and interoperability challenges as main barriers to adoption.
Dr José Viñals, Chairman of Standard Chartered PLC Group, said: “Implemented effectively, the African Continental Free Trade Area can radically reshape future growth and development. It will enable higher value-added supply chains and more diversified exports, thereby enabling Member States to reduce their historical dependence on raw materials and make significant progress towards multiple sustainable developments. Goals. Through our global footprint, local expertise and innovative solutions, we are committed to supporting the development of appropriate policies, ensuring cooperation and applying technology and capital to build better connections within the continent and beyond. of the.
Sunil KaushalRegional CEO, Standard Chartered Africa Middle East, said: “The disruptions Africa Supply chains in recent years have amplified the urgency to implement the AfCFTA. At the same time, our report’s findings highlight the need to exponentially strengthen Africa exports, from which the AfCFTA would greatly benefit. With proper regulations, collaboration and governance, this opportunity can become a reality. For over 150 years, Standard Chartered has supported Africa growth and progress, actively contributing to the infrastructure development and economic progress of the continent. We will continue to work with relevant stakeholders to boost trade across the continent and ensure Africa sustainable economic development. »
Read the full report here: https://www.sc.com/en/banking/banking-for-companies/future-of-trade-2023/
Note to editors
On the future of commerce: Africa
This report, commissioned by Standard Chartered and prepared by PwC Singapore, provides an overview of the impact of the African Continental Free Trade Area (AfCFTA) on intra-community relations.Africa trade.
This report is based on an analysis of qualitative and quantitative information from internal and external sources. All trade figures used in this report relate only to trade in goods and do not include trade in services. The impact of the AfCFTA is based on a report published by the World Bank, The AfCFTA: Economic and Distributional Effects.
A survey of 103 African executives and senior managers was conducted to understand the current challenges of intra-African competition.Africa trade as well as the commercial opportunities that the AfCFTA can bring to the continent. It also captures respondents’ views on the most effective trade facilitation measures and the impact of the Pan African Payment and Settlement System (PAPSS) on reducing the costs of cross-border payments. Beyond that, the survey provides insight into Africa business leaders’ views on the growth of e-commerce as well as the importance of supply chain financing in the context of regional trade.
Here is the link for the report https://www.sc.com/en/banking/banking-for-companies/future-of-trade-2023/
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