How Should the Private Sector Engage with the AfCFTA?
featured brief
How Should the Private Sector Engage with the AfCFTA?
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By Bathsheba Asati, Research Associate
February 28, 2021
For a continent that accounts for just 2% of global trade and where only 17% of its exports are intra-continental, the African Continental Free Trade Agreement (AfCFTA) is a much-needed initiative with the potential to expand African economies through trade. According to projections, the AfCFTA could increase intra-African trade by 81%. It also has the potential to lift 30 million people out of abject poverty and boost regional income by 7% by 2035. The Agreement’s promising future hinges on African businesses’ ability to leverage it to boost cross-border trade. At a macro-level, the agreement will deliver massive benefits to the continent, but the impact of the agreement on firms will be uneven and unequal.
In this economic snapshot, we identify three categories of companies— audacious, opportunistic, and cautious — that stand to win and lose from the AfCTA. These typologies are defined based on factors including firm size, business model, industry, and the regional regulatory environment. While the category firms fall under is not static, governments have a significant role to fulfill in positively influencing the group a firm falls under and in enabling companies to achieve their maximum potential under the AfCFTA.