in a nutshell
The African Continental Free Trade Area Agreement (AfCFTA) recently launched a guided trade initiative to test meaningful and sustained trade under the AfCFTA, enabling more climate-resilient and sustainable trade across the African continent. We are supporting the development of shorter regional value chains that However, if Africa is to take full advantage of free trade, it is imperative to sustainably develop the huge gaps in infrastructure and manufacturing across the continent.
The AfCFTA Guided Trade Initiative (GTI) is the latest development designed to facilitate trade in free trade areas across the African continent. The GTI will launch in October 2022 to test meaningful and continuous trade under the AfCFTA and to support the development of regional value chains that enable more climate-friendly and sustainable trade across the continent. is intended for
GTI tests the AfCFTA’s policy, legal framework, operational and institutional environment. Eight countries – Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia – are participating in the GTI and meet all AfCTA minimum requirements for customs books and rules of origin. GTI clears customs for goods from these countries, including beverages and food items such as ceramic tiles, sisal fiber, batteries, tea, coffee, processed meat products, corn starch, sugar, pasta, glucose syrups, dried fruits, etc. Allow shipment by African countries receiving these goods will benefit from reduced tariffs (and possibly ultimately zero tariffs). GTI will also focus on increasing opportunities in trade for small and medium enterprises (SMEs), youth and women.
The AfCFTA will increase the ease of cross-border trade and investment in Africa, as well as eliminate tariffs on intra-African trade, reduce unemployment, promote infrastructure development, and create more competitive infrastructure for cross-border trade. It has the ultimate goal of creating a sustainable environment. However, large gaps in the continent’s infrastructure, especially utilities and transport infrastructure, have hampered African countries’ ability to trade. Transport problems in African countries, exacerbated by problems in global supply chains over the past few years, have caused significant trade blockages, especially regarding the transport of goods to and from the continent’s ports. Other issues, such as bad weather, are also impacting Africa’s trade supply chains.
These challenges must be addressed by the continent if Africa is to take full advantage of free trade. Projects are already underway to boost infrastructure development across the continent. For example, the construction of a standard gauge railway project in Tanzania is expected to provide a safe and reliable means of efficiently transporting people and freight to and from the existing Dar es Salaam port. Other large-scale projects underway include the Trans-Mahreb Highway in North Africa, the North-South Combined Mode Corridor, the Central Corridor Project and the Abidjan Lagos Corridor Highway Project.
In addition, the African Union-Africa Peer Review Mechanism 2020 noted that Africa’s supply chain challenges could be met if the continent increased its manufacturing capacity and reduced its reliance on global suppliers. As a result, many African countries have started looking at ways to increase their manufacturing capacity so that they can produce local parts that can be traded within the continent without having to be imported.
According to a recent report by Baker McKenzie, Africa’s foreign imports account for more than half of the continent’s total imports, with the most important suppliers being Europe, China and the rest of Asia, including India. In contrast, imports from other parts of Africa account for only 16% of all commodity imports. Manufacturing GDP accounts for only 10% of Africa’s GDP on average. Limited production capacity within Africa is therefore supplemented by imports from abroad. The aim is to ensure that this manufacturing deficit is met within the African continent, made possible by the AfCFTA.
Shortening the supply chain also makes the supply chain more sustainable. According to the World Trade Organization, the global greenhouse gases (GHG) emitted by the production and transportation of trade in goods and services account for about 20-30% of his GHG emissions in the world.
To promote sustainable trade under the AfCFTA, Africa will significantly increase climate finance for large continental-scale investments in infrastructure, manufacturing capacity, clean energy and climate change adaptation. should be increased to The African Development Bank (AfDB) will support Africa in adapting to and mitigating the risks of climate change and to assist African countries in effectively implementing their National Determined Contributions (NDCs) by 2030. Approximately US$1.6 trillion will be needed by under the Paris Agreement. These funding commitments are the subject of major debate at the United Nations Climate Change Conference (COP 27) in Egypt.
Promoting local production and regional trade (currently being developed through initiatives such as GTI), and developing climate-resilient infrastructure and manufacturing can make Africa more competitive globally. For example, how to sustainably bridge the gaps in infrastructure and manufacturing on the African continent through investments in renewable energy projects, food security initiatives, shortened supply chains, and projects that support SMEs, women and youth traders. The success of free trade in Africa will benefit if it can be developed in whole earth.