Global chief executives back plan to unlock US$3.4 trillion for continental free trade area
African heads of state and global chief executives at the World Economic Forum annual meeting backed the launch of the first-of-its-kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
“AfCFTA: A New Era for Global Business and Investment in Africa” outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the FTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report offers a pathway for global businesses and investors to understand the biggest trends, opportunities, and strategies to successfully invest and achieve high returns in Africa, developing local, regional, and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the FTA.
The AfCFTA is the largest free trade zone in the world by geographical area with many participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than US$3.4 trillion. Conceived in 2018, it now covers 54 national economies in Africa, has the potential to attract billions in foreign investment, boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To support the process of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President of, the World Economic Forum. “The Forum’s initiatives will help to ease physical, capital, and digital flow in Africa through stakeholder collaboration, private-public collaboration, and information-sharing.”
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the FTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration, and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, at the World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agro-processing; pharmaceuticals; and transport and logistics.
“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income, and connectivity are on the rise,” said Wamkele Mene, Secretary General of the AfCFTA Secretariat.
“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.
The Forum is actively working to implement trade and investment tools through initiatives such as Friends of the Africa Continental Free Trade Area, to align with the inernal negotiation process of the AfCFTA. It identifies areas where public private collaboration will help reduce barriers and facilitate investment from international firms.
