AfCFTA can lift 100 million out of poverty in Africa, says World Bank

A new World Bank report says full implementation of the AfCFTA would contribute to development by raising an additional 1.5% of the continent’s population out of extreme poverty

The implementation of the Africa Continental Free Trade Area (AfCFTA) has the potential to lift about 100 million people from poverty if countries commit to the agreement and put in the necessary reforms to make it happen, a new report by the World Bank says.

Africa’s Pulse report for October 2020 says the continental trade pact could lift an additional 30 million people from extreme poverty and 68 million people from moderate poverty.

It adds that the headcount ratio of extreme poverty in Africa is projected to decline from 34.7% in the latest estimate (2015) to 10.9% by 2035. Full implementation of the AfCFTA would contribute to a further decline by lifting an additional 1.5% of the continent’s population out of extreme poverty.

The report projects that, in West Africa, the poverty headcount would decline by 12 million people, while the decline in Central Africa would be 9.3 million and in East Africa 4.8 million.

At the moderate poverty line of US$5.50 a day in purchasing power parity terms, the AfCFTA has the potential to lift 67.9 million people (about 3.6% of the continent’s population) out of poverty by 2035.

Good policies

To achieve this, it is important that AfCFTA member states put in place policies that will maximise the full potential benefits of the agreements, the Bank says.

This involves addressing on-the-ground constraints which may weaken the daily operations of ordinary producers and traders, by reforming regulatory frameworks and building capacity among the institutions that enforce these regulations.

“The potential of the AfCFTA to become a milestone for development in the region will depend on the depth and breadth of the detailed commitments to remove trade barriers that are to be negotiated,” says the report, “…the extent to which AfCFTA commitments are effectively implemented on the ground, and specific complementary initiatives ensuring a smooth transition to free trade and inducing greater flows of productive investment in no-ntraditional sectors, leading to more and better jobs.”

It acknowledges: “Implementing the obligations in the trade agreement will likely prove challenging for many member states.

“AfCFTA institutions will likely require additional support to implement the agreement effectively, to identify critical bottlenecks and challenges in their economies and prioritise specific actions to ensure a smooth transition to free trade as well as attract more investments.”


Along with challenges that emerge from monitoring the ongoing implementation of the agreement, action is needed to ensure fairness and a level playing field for all traders, the report also says.

It foresees that one of the difficulties that the agreement will face will be enacting non-tariff and trade facilitation measures which will yield potentially the largest economic gains. Substantial policy reforms at the national level will be required to deal with this challenge.

“Achieving the AfCFTA’s full potential depends on agreeing to ambitious liberalisation and implementing it in full. Partial reforms would lead to smaller effects,” the World Bank says.

The AfCFTA provides an opportunity for Africa to create the world’s largest free trade area, uniting 1.3 billion people in an economic bloc with a combined GDP of US$2.5 trillion and ushering in a new era of development.

The main objectives of the AfCFTA are to create a continental market for goods and services with free movement of people and capital, and pave the way for a customs union. It will also grow intra-African trade through better harmonisation and co-ordination of trade liberalisation policy across the continent.

The AfCFTA is further expected to enhance competitiveness of African industry and enterprise by exploiting the opportunities for scale production, continental market access and better reallocation of resources.

In July 2019 Ghana won the bid to host the AfCFTA secretariat. Among the obligations and commitments in the host country agreement, Ghana is required to provide a fully furnished office complex as the headquarters of the secretariat and an official residence for the secretary general. The country has met these requirements and the AfCFTA secretary general, Wamkele Mene, took up residence in Accra in August.

Host country duties also make Ghana responsible for overseeing the implementation of the agreement. The country has further committed to donate $10 million to make the AfCFTA Secretariat operational.

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