Zim tipped to be AfCFTA’s biggest beneficiary

ZIMBABWE has been identified as one of the top two African countries that will benefit immensely from the African Continental Free Trade Area.

Zimbabwe officially joined the African Continental Free Trade Area (AfCFTA) in February this year when President Emmerson Mnangagwa attended the 33rd Ordinary Session of the Assembly of Heads of State and Government of the African Union in Addis Ababa, Ethiopia.

According to a new World Bank report released yesterday, Zimbabwe, alongside Côte d’Ivoire will experience higher income growth from AfCFTA, than any other country.

The report states that the AfCFTA agreement would reshape markets and economies across the region, leading to the creation of new industries and the expansion of key sectors. Overall economic gains would vary, with the largest gains going to countries that currently have high trade costs.

Côte d’Ivoire and Zimbabwe — where trade costs are among the region’s highest — would see the biggest gains, with each increasing income by 14 percent. Overall, AfCFTA represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion, according to the report.

“The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” said Albert Zeufack, the World Bank’s Chief Economist for Africa.

“The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers — women and men, skilled and unskilled — across all countries and sectors, ensuring the agreement’s full benefit.”

If implemented fully, the trade pact could boost regional income by 7 percent or US$450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.
AfCFTA is also expected to significantly boost African trade, particularly intraregional trade in manufacturing. Intra-continental exports would increase by 81 percent while the increase to non-African countries would be 19 percent.

Implementation of the agreement would also spur larger wage gains for women (an increase of 10,5 percent by 2035) than for men (9.9 percent). It would also boost wages for skilled and unskilled workers alike — 10.3 percent for unskilled workers, and 9.8 percent for skilled workers.

Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures.

Tariff liberalisation accompanied by a reduction in non-tariff barriers — such as quotas and rules of origin — would boost income by 2,4 percent, or about US$153 billion.

The remainder — US$292 billion — would come from trade-facilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade, and make it easier for African businesses to integrate into global supply chains.

The report suggests that achieving these gains will be particularly important given the economic damage caused by the Covid-19 (coronavirus) pandemic, which is expected to cause up to US$79 billion in output losses in Africa in 2020.–chronicle.cl.zw

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