Africa’s total exports are set to reach around $952 billion by 2035, as regional trade grows and connectivity expands, according to a new report.
Once the African Continental Free Trade Area (AfCFTA) agreement is fully implemented, exports could further grow by 29%, representing an annual growth rate of 3% from now until 2035, Standard Chartered said in its Future of Trade: Africa report.
“Implemented effectively, the African Continental Free Trade Area can radically reshape future growth and development,” said José Viñals, Group Chairman of Standard Chartered.
”It will enable higher value-add supply chains and more diversified exports, allowing member states to reduce historical commodity dependence and achieve meaningful progress towards multiple sustainable development goals.”
The AfCFTA pact seeks to establish the world’s largest free trade area, reducing tariffs among members and connecting more than 1 billion consumers in 55 countries whose combined economies are valued at $3.4 trillion.
Last year, the World Bank estimated that the trade pact could boost regional incomes by as much as 9% to $571bln and create nearly 18 million additional jobs, many of them higher-paying and better-quality employment opportunities.
Trade growth in various corridors
Standard Chartered forecast that intra-Africa trade could reach $140 billion by 2035, accounting for 15% of Africa’s total exports.
Trade volumes in the East Africa-South Asia corridor could grow by 7.1% per annum through 2035, making It the fastest-growing corridor, while the Middle East-North Africa and the Middle East-East Africa corridors are tipped to have combined trade volumes worth nearly $200 billion by 2035.
However, Standard Chartered noted that Africa still needs to overcome some barriers.
In a poll among 100 African business leaders, 63% said that complex and uncertain trade rules are one of the top challenges of intra-African trade, while more than half (53%) cited underdeveloped transportation infrastructure as a major barrier.
More than half (51%) said that ineffective trade facilitators are another challenge, while 46% cited limited and/or costly access to capital.
However, the majority of business leaders (90%) believe that the AfCFTA pact can address most of the challenges.
(Writing by Cleofe Maceda; editing by Seban Scaria)