In March 2018, African countries signed the landmark African Continental Free Trade Agreement (AfCFTA), which commits countries to remove tariffs on 90% of goods, gradually liberalise trade in services and address a host of non-tariff barriers. AfCFTA will make Africa the largest free trade area in the world, with more than 1 billion consumers and a Gross Domestic Product (GDP) in excess of US$3 trillion. AfCFTA goes far beyond the remit of traditional free trade areas (FTAs), as it includes trade in services, investment, intellectual property rights, competition policy and e-commerce. AfCFTA is complemented by other continental initiatives, which advance efforts to integrate Africa’s economies. Among these are the Protocol on Free Movement of Persons, Right of Residence and Right of Establishment, and the Single African Air Transport Market (SAATM), all of which constitute priority projects in the FTYIP of Agenda 2063, the implementation of which AUDA-NEPAD will facilitate during the period of this Strategic Plan. It is expected that intra-Africa exports, as a percentage of total exports, will grow from the present 17% to levels comparable to that of Europe (69%), Asia (59%) or North America (31%). The ECA has projected that, through the removal of tariffs on goods alone, there will be an increase in the value of intra-African trade by between 15% (or US$50 billion) and 25% (or US$70 billion) in 2040, compared to a situation with no AfCFTA in place. Alternatively, the share of intra-African trade will increase by nearly 40% to over 50% between the start of the implementation of the reform (2020) and 2040.

In promoting the integration of the continent’s economies, AUDA-NEPAD expects that industrialisation will significantly promote export diversification to reduce reliance on rents from the extractive industries; and that it will grow small-and medium-scale entreprises (SMEs) and enable African countries to break into new markets on our continent.

AfCFTA will stimulate demand for intra-African food imports, improve export sophistication across the continent by enabling more countries to integrate regional and global value chains and consequently increase the quality of exports.

In order for AfCFTA to fulfil its enormous potential in diversifying and transforming African economies, countries will need to develop effective policies and strategies for exports, as well as identify new opportunities for diversification, industrialisation and the development of value chains. In order to achieve this, however, AfCFTA will require complementary policies and a strong focus on achieving tangible outcomes from other initiatives such as the Boosting Intra-African Trade (BIAT) Action Plan. BIAT offers a framework for addressing key constraints to intra-Africa trade and diversification under seven clusters: trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information, and factor market integration. Particular attention will be needed on trade facilitation and the building of production capacities. African countries are already strategising on how to benefit from the agreement and are developing plans of action to take advantage of national, regional, and global markets in the AfCFTA context.

In pursuance of these objectives, AUDA-NEPAD will support initiatives under AfCFTA, BIAT, SAATM in order to foster African economic integration and industrialisation.