African heads of state and global CEOs have 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).
At the World Economic Forum (WEF) Annual Meetings yesterday, the leaders endorsed the “AfCFTA: A New Era for Global Business and Investment in Africa” report, which highlights the high potential for companies investing in the world’s largest free trade area.
The report outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
It also aims to provide 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, subregional and continental value chains and accelerating industrialisation, all of which go hand in hand with the success of the AfCFTA.
The report focuses on four key sectors that have a combined worth of $130 billion (R2.2 trillion), and represent high-potential opportunities for companies looking to invest in Africa.
These sectors are automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
AfCFTA secretariat Wamkele Mene said these sectors were industries of enormous potential for investment in Africa.
“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,” Mene said.
WEF Regional Action Group for Africa co-chair Landry Signé concurred, saying that investment in these sectors would propel the development agenda of the continent.
“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,” Signé said.
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA 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, WEF Africa’s head of regional agenda.
The WEF is actively working towards implementing trade and investment tools that are aligned with the negotiation process of the AfCFTA by identifying areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
To do so, the forum is helping to drive these goals across five key pillars to ease physical, capital and digital flows in Africa and grow inclusive and sustainable development.
WEF President Børge Brende said global businesses had an important role to play in accelerating the implementation of the AfCFTA.
Brende said Africa had learned from trade liberalisation in North America and Europe to ease the pain of transition to its new single market.
“Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” Brende said.
“The forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”
The AfCFTA is the largest free trade area in the world, by area and number of participating countries.
Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined gross domestic product of more than $3.4trl.
Conceived in 2018, it now has 54 national economies in Africa, could 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.
BUSINESS REPORT