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The African Continental Free Trade Area

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  • World Bank

Abstract

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world, measured by the number of countries participating. The pact will connect 1.3 billion people across 55 countries with a combined GDP valued at $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty by 2035. But achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures. The scope of the agreement is considerable. It will reduce tariffs among member countries and cover policy areas, such as trade facilitation and services, as well as regulatory measures, such as sanitary standards and technical barriers to trade. It will complement existing subregional economic communities and trade agreements by offering a continent-wide regulatory framework and by regulating policy areas—such as investment and intellectual property rights protection—that have not been covered in most subregional agreements. The African Continental Free Trade Area: Economic and Distributional Effects quantifies the long-term implications of the agreement for growth, trade, poverty reduction, and employment. Its analysis goes beyond that in previous studies that have largely focused on tariff and nontariff barriers in goods—by including the effects of services and trade facilitation measures, as well as the distributional impacts on poverty, employment, and wages of female and male workers. It is designed to guide policy makers as they develop and implement the extensive range of reforms needed to realize the substantial rewards that the agreement offers. The analysis shows that full implementation of AfCFTA could boost income by 7 percent, or nearly $450 billion, in 2014 prices and market exchange rates. The agreement would also significantly expand African trade—particularly intraregional trade in manufacturing. In addition, it would increase employment opportunities and wages for unskilled workers and help close the wage gap between men and women.

Suggested Citation

  • World Bank, 2020. "The African Continental Free Trade Area," World Bank Publications - Books, The World Bank Group, number 34139.
    • Handle: RePEc:wbk:wbpubs:34139
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    Citations

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    Cited by:

    1. N.M. Odhiambo, 2022. "Does Foreign Direct Investment Spur Economic Growth? New Empirical Evidence from Sub-Saharan African Countries," Working Papers AESRI-2022-20, African Economic and Social Research Institute (AESRI), revised Jul 2022.
    2. Amendolagine, Vito & Prota, Francesco, 2021. "Bilateral investment treaties and backward linkages in Sub-Saharan Africa," International Economics, Elsevier, vol. 165(C), pages 172-185.
    3. Fabien Candau & Geoffroy Guepie & Reine Kouakou, 2018. "In Gravity no Veritas: Dubious Trade Elasticiy and Weak Effects of Regional Trade Agreements in Africa," Working Papers hal-02625930, HAL.
    4. Chrimes, Tommy & Gootjes, Bram & Kose, M. Ayhan & Wheeler, Collette, 2024. "The Great Reversal," CEPR Discussion Papers 19090, C.E.P.R. Discussion Papers.
    5. Nicholas M. Odhiambo, 2022. "Does Foreign Direct Investment Spur Economic Growth? New Empirical Evidence From Sub-Saharan African Countries," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 61-84, April – J.
    6. Chichaibelu, Bezawit Beyene & Bekchanov, Maksud & von Braun, Joachim & Torero, Maximo, 2021. "The global cost of reaching a world without hunger: Investment costs and policy action opportunities," Food Policy, Elsevier, vol. 104(C).
    7. Fabinin, Akem Nina, 2021. "Pulse, Export and Staple Convenience Food: Market Analysis in West Africa," 2021 Conference, August 17-31, 2021, Virtual 315370, International Association of Agricultural Economists.
    8. repec:ocp:rtrade:pp_13-22 is not listed on IDEAS
    9. Ferdj Younes, 2024. "The impact of the COVID-19 pandemic on regional economic integration in the Maghreb region – an Algerian perspective," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 17(2), pages 290-313.
    10. Debrah, Yaw A. & Olabode, Oluwaseun E. & Olan, Femi & Nyuur, Richard B., 2024. "The African Continental Free Trade Area (AfCFTA): Taking stock and looking ahead for international business research," Journal of International Management, Elsevier, vol. 30(2).
    11. Bertha Nyarire Makilagi & Jinhwan Oh, 2023. "What determines Tanzania's trade? A gravity approach," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 26(4), pages 438-448, December.
    12. Damilola Kuteyi & Herwig Winkler, 2022. "Logistics Challenges in Sub-Saharan Africa and Opportunities for Digitalization," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    13. Skylar Brooks, 2021. "Revisiting the Monetary Sovereignty Rationale for CBDCs," Discussion Papers 2021-16, Bank of Canada.
    14. Lukman OYELAMI & Amara ZONGO, 2022. "Modeling the Impact of Non-Tariff Barriers in Services on Intra-African Trade: Global Trade Analysis Project Model," Bordeaux Economics Working Papers 2022-08, Bordeaux School of Economics (BSE).
    15. Lionel Fontagné & Mathilde Lebrand & Siobhan Murray & Michele Ruta & Gianluca Santoni, 2023. "Trade and Infrastructure Integration in Africa," Working Papers 2023-14, CEPII research center.
    16. Nicholas M. Odhiambo, 2022. "Does Foreign Direct Investment Spur Economic Growth? New Empirical Evidence From Sub-Saharan African Countries," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 61-84, April – J.
    17. repec:ocp:rpaper:pp-1322 is not listed on IDEAS
    18. Johannes Paha & Timon Sautter & Reinhard Schumacher, 2021. "Some Effects of EU Sugar Reforms on Development in Africa," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(5), pages 288-294, September.
    19. repec:ocp:rpaeco:pp_13-22 is not listed on IDEAS
    20. Jonathan D. Quartey, 2021. "Addressing the Missing Link for Sustainable African Continental Free Trade: Lessons from Ghana’s Manufacturing Industry," Asian Development Policy Review, Asian Economic and Social Society, vol. 9(1), pages 1-23, March.
    21. Mo Bi & Zhenke Zhang, 2024. "Exploring the Path of Autonomous Development: the Development Dilemma and Coping Strategies of Sub-Saharan Africa in the Post-epidemic Era," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 5043-5071, March.
    22. Pousseni Bakouan & Mahamadou Diarra & Idrissa M. Ouedraogo, 2024. "How Can Tariff Elimination and Trade Facilitation Affect East African Economies?," Foreign Trade Review, , vol. 59(1), pages 117-145, February.
    23. Simon Yannick Fouda Ekobena & Adama Ekberg Coulibaly & Mama Keita & Antonio Pedro, 2021. "Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa," African Development Review, African Development Bank, vol. 33(3), pages 452-465, September.
    24. Stender, Frederik & Vogel, Tim, 2021. "Murky trade waters: Regional tariff commitments and non-tariff measures in Africa," IDOS Discussion Papers 13/2021, German Institute of Development and Sustainability (IDOS).
    25. Dr. Caroline Ntara, 2022. "What Does Africa Stand to Gain from the African Continental Free Trade Area?," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 69-90.

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