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Global business and its role in Africa’s free trade area

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Agriculture is one of the key sectors identified in the WEF report. Image credit: Leon Louw for WhyAfrica

Global business and its role in Africa’s free trade area 

According to a new report by the World Economic Forum (WEF), global businesses have an important role to play in accelerating the implementation of the Africa Continental Free Trade Area (AfCFTA).

African heads of state and global CEOs at the WEF’s Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the 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 AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report 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.

Largest free trade area in the world (Global business and its role in Africa’s free trade area)

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 GDP of more than USD3.4-trillion.

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.

To ease the pain of transition to its new single market, Africa has learned from trade liberalisation in North America and Europe.

“Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” says Børge Brende, President, World Economic Forum.

“The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing,” says Brende.

Removing the barriers of trade (Global business and its role in Africa’s free trade area)

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.

According to Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum, 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.

The report focuses on four key sectors that have a combined worth of USD130-billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; 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,” says Wamkele Mene, Secretary-General, 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,” adds 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 towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA.

It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

Global business and its role in Africa’s free trade area

WhyAfrica specialises in the sustainable utilisation of natural resources in Africa. We publish bi-weekly newsletters (24 per year), four magazines per year, and paid for research reports in the mining, agriculture, energy, infrastructure, water management, tourism, and environmental management sectors with a special focus on Environmental and Social Governance (ESG), biodiversity risk, conservation, the African Continental Free Trade Agreement, the political economy of Africa, Pan African institutions, climate change and how geopolitics affect the people of Africa. 

WhyAfrica readers and followers can now become members of WhyAfrica. Having membership for one year allows you access to valuable business intelligence and insight about projects, investments, the sustainable utilisation of natural resources and the political economy of Africa. 

WhyAfrica members will be able to publish their own story on the WhyAfrica website and on all its social media platforms (corporate members pay more but can publish four articles per year). 

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One of WhyAfrica’s goals is to identify the opportunities and challenges in Africa, and at the same time, to stay informed about how geopolitics and the changing political economies in Africa affect your business. As a member you will have access to all this business intelligence. You can now register and pay to become a member by simply clicking on the following link: https://www.whyafrica.co.za/product/membership/

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Global business and its role in Africa’s free trade area

 

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AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management