With the launch of the African Continental Free Trade Area (AfCFTA) on January 1, ushering in a new era of regional integration, tariff reductions could increase export potential by up to $9.2 billion.
That’s one of the findings of a joint technical paper by the International Trade Centre and the United Nations Conference on Trade and Development which, in its wide-ranging scope, examines the sectors with the highest export potential.
Under the AfCFTA, intra-African tariffs will be liberalised within the next five years by non-LDCs (least developed countries) or ten years by LDCs and countries in Regional Economic Communities (REC) with LDCs.
“While 90% of products will be fully liberalised, 7% of products may be categorised as “sensitive” and liberalised over a longer period, and 3% of products can be excluded from liberalisation altogether,” the report points out.
“As product lists are not yet fully known, the exact impact of the AfCFTA cannot be calculated. However, it is possible to calculate an upper limit of possible export potential gains under the current rules. If countries liberalising as non-LDCs fully liberalise all products within the next five years, and countries liberalising as LDCs reduce tariffs by half, this would increase intra-African export potential by $9.2 billion.”
The report identifies vehicle as the sector with the highest export potential, at almost $2 billion. This is followed by sugar ($463 million), soap and washing preparations, fish and crustaceans, plastics, and electrical machinery and equipment (all between $350 million and $375 million). There is however a caveat in that the choice of sensitive and excluded products by African countries may affect the ranking of sectors. “In addition, if countries decide to categorise products with particularly high tariffs as sensitive or excluded, the export potential gains from the AfCFTA will be substantially smaller than $9.2 billion.”
