- May 19, 2023
- Posted by: Ato
- Category: Economics
According to the International Monetary Fund, removing trade restrictions between African nations will assist 50 million people escape poverty.
The IMF made this statement via a recent study titled “Trade Integration in Africa: Unleashing the Continent’s Potential in a Changing World.”
The elimination of trade barriers, according to the IMF, would boost the average amount of products traded between African nations by 53%. The research also points out that trade will rise by 15% for the remainder of the world.
“It finds that removing trade barriers would increase the median goods trade between African countries by 53 percent and with the rest of the world by 15 percent; raise the median African country’s real per capita GDP by more than 10 percent; and help lift an estimated 30-50 million people out of extreme poverty,” an extract from the report reads.
According to the organization, the African Continental Free Trade Agreement’s effective implementation might bring about significant advantages for the continent.
“Successful implementation of the African Continental Free Trade Area could unlock important benefits including for jobs and income,” the report adds.
The report further read in part, “Seizing these opportunities will require investment in physical and human capital, a robust macroeconomic and business environment conducive to private sector-led growth, and a modernized social safety net that supports the most vulnerable during the transition to a higher growth trajectory..”
In terms of results, import duties on trade inside Africa average 6 percent, which is still higher than equivalent tariffs in other areas. Although certain RECs also have significant import duties, this primarily reflects high levies on imports from other RECs. For instance, while trade within the West African Economic and Monetary Union (WAEMU), the Central African Economic and Monetary Community (CEMAC), and the Southern African Customs Union (SACU) is duty-free, the Arab Maghreb Union (AMU) and the Economic Community of Central African States (ECCAS) have average within-bloc tariff rates of 9% and 11%, respectively.
The AfCFTA establishment comes at a time when Africa faces both possibilities and difficulties as a result of the changing global environment. Greater trade integration can help the continent benefit from demographic and technology trends’ possibilities while also strengthening its resistance to shocks like climate change and geopolitical fragmentation.