Africa's free trade area is delayed by the pandemic, but experts say it's vital to recovery

Africa was expecting a modest growth of approximately 4% for the year; however, due to the Covid-19 pandemic, it will not meet that target. Sadly, African growth will be negative for the year. The Covid-19 effect on African economies isn't just on consumer demand; it is also in exports. Africa exports it's products mainly to European nations and has seen a growing demand from China, which has been affected by the pandemic.

With a global economic crisis, Africa can no longer rely on the same supply chains. The reduced demand from Europe and China and the disruption in supply chains will force Africa to look for new markets. Fortunately, Africa was in the middle of creating its market with the African Continental Free Trade Area (AfCFTA), which could make a single market worth trillions.

African nations were expecting to start trading under AfCFTA on July 1, but as with most things this year, it has been delayed by the pandemic. The World Bank estimated that the trade pact could improve regional income by $450 billion (an increase of 7 percent of current levels) and potentially lift 30 million people out of extreme poverty by 2035. $153 billion of the income increase can come from tariff liberalization along with reducing non-tariff barriers. The other $292 billion can be realized by lowering trade costs and integrating African businesses into global supply chains.

AfCFTA will not only boost interregional and intercontinental trade. It could also make African businesses more competitive in world markets and boost intra-continental exports by 81 percent.

A quick win for Africa could be to reconfigure it's supply chains in response to the Covid-19 pandemic. Borders are closing, and nations prioritize their own needs, particularly when it comes to essentials like medicine and medical equipment. Connecting African suppliers to African buyers would not only shore up medical supplies but create the links needed for a sustainable African supply chain.

Implementing AfCFTA will create demand and supply chains among African neighbors. Africa has the opportunity to reconfigure supply chains, establish regional value chains, and boost the manufacturing sector with this trade union.

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