ADDIS ABABA, Sept. 25, (Xinhua) – The UN
Economic Commission for Africa (ECA) on Monday said the African Continental
Free Trade Area (AfCFTA) is a unique and timely opportunity for the continent.
Andrew Mold, Acting Director of the ECA in
eastern Africa, said on Monday that the AfCFTA “marks a fundamental step
towards dismantling barriers and reducing costs to intra-African trade, boost
industrialization, improve productivity and competitiveness of Africa for the
creation of the much-needed jobs on the continent.”
According to figures from the ECA, Africa’s
trade balance moved from a surplus of US$24 billion in 2012 to a deficit of
US$87 billion in 2014 and US$155 billion in 2016.
ECA further estimated that in recent years
African imports have fallen, but not by enough to reduce the widening trade
deficit, in which Africa’s merchandise imports declined from US$642 billion in
2014 to US$501 billion in 2016.
“Exports, however, contracted
significantly more than imports over the period, contributing to the region’s
widening trade deficit,” ECA said in a statement.
The African Continental Free Trade Area,
according to ECA, has the potential to boost intra-African trade by more than
52 percent through the elimination of import duties alone.
“It is estimated that the benefits would
double if combined with trade facilitation measures to further reduce
non-tariff barriers,” it indicated.
According to Mold, Africa’s trade with the
rest of the world over the past six decades has not delivered the promised
diversification and that most countries on the continent are still
import-dependent and export excessive amounts of unprocessed commodities,
resulting countries in Africa to run up large trade deficits.
Mold noted that the fragmentation of African
economies limits the ability of African businesses to build their
competitiveness.
“Integration is critical for Africa to
drive manufacturing sector and industrialization and to boost its production
and trade,” the statement quoted Mold as saying.
“This matters because African trade
deficits are principally driven by the lack of industrialization,” he
added.
From 2012 to 2014, over 75 percent of Africa’s
exports to outside the continent were extractives, such as oil and minerals,
according to the ECA.
ECA further advised that as Africa’s
industrial exports are expected to benefit most from the AfCFTA, it is
important for diversifying the continent’s trade and encouraging a move away
from extractive commodities towards a more balanced and sustainable export
base. It also reiterated its readiness
“to provide all the necessary support to the governments of the region to
make the AfCFTA a reality.”
The AfCFTA will officially come into force
once at least 22 countries have ratified the agreement, potentially making the
continent the largest trading bloc in the world.
GNA