The period of unprecedented growth in the 2000s has not translated into significantly improved livelihoods for most people in Africa, as the income gap between rich and poor has widened. The study recommends a proper implementation of AfCFTA could result an inclusive growth.
The African Continental Free Trade Area (AfCFTA) could reduce COVID-19-induced growth contraction, poverty and inequality trends and spur sustainable and inclusive growth on the continent if stronger support measures targeting women, young traders and small businesses are implemented, according to UNCTAD’s Economic Development in Africa Report 2021 published on 8 December.
According to the report, growth has been inclusive in only 17 out of 49 African countries for which sufficient household data for between 2000 and 2020 is available. Africa’s economic growth has been poverty-reducing, the report says, but inequality-increasing in 18 African countries and non-inclusive on either dimension in 14 nations.
Including Ethiopia, in 14 countries – namely – Burundi, Chad, the Congo, Djibouti, Eswatini, Ghana, Malawi, Mauritius, Mozambique, Seychelles, South Africa, Togo and the United Republic of Tanzania, growth was followed by an increase in inequality.
Existing special economic zones in Ethiopia. Egypt, Kenya, Nigeria, and South Africa, driven in most instances by strong public–private partnerships, have recorded high rates of capacity utilization, created jobs and linked businesses, including small and medium-sized enterprises and services-related start-ups, to larger companies (UNCTAD, 2019).
The continent’s current untapped export potential amounts to $21.9 billion, equivalent to 43% of intra-African exports. It says an additional $9.2 billion of export potential can be realized through partial tariff liberalization under the AfCFTA over the next five years.
Intra-African trade is currently low at 14.4% of total African exports. It’s comprised of 61% processed and semi-processed goods, suggesting higher potential benefits from greater regional trade for transformative and inclusive growth, the report finds.
The AfCFTA, under which free trade officially commenced in January 2021, is one of the flagship projects of the African Union’s Agenda 2063, which includes various targets on sustainable and inclusive growth. Economic growth can only be inclusive if it reduces both poverty and inequality, the report says.
Source: https://unctad.org/system/files/official-document/aldcafrica2021_en.pdf
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