Effects of the AfCFTA for German and European Companies

Julian Hinz — Sat, 01 Oct 2022 00:00:00 +0000

In May 2019, the African Continental Free Trade Area (AfCFTA) agreement entered into force. In numerous respects, the AfCFTA can be considered a historic milestone towards trade liberalization on the African continent. Following ten rounds of official negotiations beginning in June 2015, the agreement now spans 55 African Union Member States of which 43 have already deposited their instruments of ratification. By connecting these economies, AfCFTA has become the largest trading bloc in the world in terms of market size, covering more than 1.3 billion consumers with combined GDP of USD 2.5 trillion. The AfCFTA’s core objective is to deepen the economic integration of the African continent by creating a single market for the movement of goods, services, capital and natural persons. In this study, we assess the status quo of trade within AfCFTA economies and between AfCFTA and EU economies, and outline three hypothetical future outcomes of AfCFTA for different levels of trade liberalization. The study was conducted with the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ).

Potential Economic Benefits of the African Continental Free Trade Area for Africa and the EU

Julian Hinz — Sat, 01 Jan 2022 00:00:00 +0000

Despite some growth, intra-African trade activity remains at low levels and falls far behind the levels of internal trade observed in more integrated regions like the EU. The European continent remains a major trading partner, but its share in total African exports and imports has decreased from nearly 50% to 35% between 2000 and 2020. Our simulations suggest that implementing the African Continental Free Trade Area (AfCFTA) agreement can lead to substantial welfare gains in Africa, but only if tariff reductions are accompanied by a significant lowering of Non-Tariff-Barriers (NTBs). If NTBs are reduced on a multilateral basis, the EU’s declining trade share with Africa might also be reversed. European governments and EU institutions should therefore have an incentive to provide technical and financial assistance — possibly within the framework of the existing WTO-led aid-for-trade initiative — to help AfCFTA economies lowering NTBs on a multilateral basis.

Africa · Julian Hinz

Effects of the AfCFTA for German and European Companies

Potential Economic Benefits of the African Continental Free Trade Area for Africa and the EU