Agriculture makes up 35% of Africa’s GDP and employs about half of its people, but the continent still imports billions of dollars of agri-product every year.
Under the African Continental Free Trade Area (AfCFTA) agreement, Africa’s need to import so much will be reduced, and domestic processing capacity boosted massively.
The benefits of the AfCFTA are outlined in a new report by the World Economic Forum: AfCFTA: A New Era for Global Business and Investment in Africa.
Agriculture accounts for roughly one-third of the African continent’s GDP, provides a livelihood for 50% of the population and feeds hundreds of millions of people on the continent and beyond every day.
The key role that agriculture plays in the continent’s economy is only set to grow in strength and size under the African Continental Free Trade Area (AfCFTA) agreement, struck in February 2021 and now in full swing.
A new era for African agriculture
According to the World Economic Forum’s Insight Report on the deal — AfCFTA: A New Era for Global Business and Investment in Africa — the free trade area, one of the world’s largest by number of people and economic size, is projected to host 1.7 billion people and oversee $6.7 trillion in consumer and business spending by 2030.
The deal will be transformative for many of Africa’s industries, but given agriculture’s already central role in the continent’s economy, and its huge potential for growth, agriculture will be a prime beneficiary.
According to the Forum’s report, agriculture has exceptional potential for increasing intra-African trade, meeting local demand, accelerating GDP growth, creating new jobs and improving inclusivity due to upstream and downstream linkages.
It will increase value addition, meet new local demand and bring smallholder farmers — who are responsible for 80% of Africa’s food production — into wider supply chains.
Opportunities abound in the AfCFTA for new investment in agro-processing, in particular.