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ODI–GIZ AfCFTA policy brief series

Briefing/policy papers

Written by Sherillyn Raga, Prachi Agarwal

Africa hosts some of the world’s fastest growing economies. For instance, in the decade prior Covid-19 (2011-2019), economies grew annually by 9.5% in Ethiopia, 7.1% in Rwanda and 6.7% in Tanzania, based on IMF data. However, economic development remains highly uneven. Out of 54 African countries, 2 are considered high-income countries, 6 are in upper-middle income group, 23 are in lower middle-income group and 23 remain low-income countries, based on World Bank classification.

Trade is one channel through which African countries can boost growth and economic transformation. However, Africa has only a 3 percent share of global trade as of 2019. At the same time, 44 African countries are considered dependent on commodity exports (i.e., main exports are agricultural products, fuel, minerals, ores and metals). In addition, intra-African trade remains below its potential, accounting for only 16% of total trade as of 2019.

To accelerate intra-African trade and improve Africa’s position in the global market, African governments established the African Continental Free Trade Area (AfCFTA). Phase 1 of the AfCFTA negotiations covers trade in goods, services and rules of origin. Under Phase 1, tariffs will be progressively liberalised in stages and apart from ‘sensitive’ and ‘exclusion list’ products under the AfCFTA. Tariffs will be liberalised (to zero) for 90% of tariff lines over 10 years for LDCs (least developed countries) and five years for non-LDCs. Phase 2 of the AfCFTA negotiations covers investment, competition policy, intellectual property rights, digital trade, and women and youth in trade. As of  29 January 2022, 40 of which have deposited their instruments of ratification of the AfCFTA to the African Union Commission.

Trading under the AfCFTA Agreement began on 1 January 2021. One year into the implementation of the Agreement, the ODI and GIZ (on behalf of the German government) launches this policy brief series to broadly investigate opportunities and challenges towards implementation of AfCFTA in eight selected African countries, namely Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Ghana, Malawi, Niger, Rwanda and Tunisia. The papers aim to inform relevant stakeholders, including the private sector and non-AfCFTA experts, on respective countries’ current socioeconomic development, global trade landscape and opportunities, business environment challenges, intra-African trade performance, and status of the AfCFTA implementation.