Cover Staff Discussion Notes
The African Continental Free Trade Area: Potential Economic Impact and Challenges
Author:
Mr. Lisandro Abregonull

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Mr. Mario de Zamaroczy
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Tunc Gursoynull

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Garth P. Nichollsnull

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Hector Perez-Saiznull

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https://orcid.org/0000-0001-6376-636X
, and
Jose-Nicolas Rosasnull

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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2020: Issue 004
Language:
English
Publication Date:
13 May 2020
DOI:
https://doi.org/10.5089/9781513542379.006
ISBN:
9781513542379
ISSN:
2617-6750
Pages:
41
Keywords:
SDN; trade diversion; AfCFTA agreement; CGE trade model; trade openness; preferential trade arrangement; trade growth; AfCFTA benefit; AfCFTA agenda; AfCFTA welfare; AfCFTA secretariat; net effect; trade creation; reform strategy; AfCFTA study; Trade barriers; Tariffs; Trade liberalization; Trade facilitation; Employment; Africa; Southern Africa; Global; Sub-Saharan Africa; AfCFTA; welfare; general equilibrium; inequality; structural reforms; North Africa
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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Political momentum towards Africa-wide free trade has been intensifying. In March 2018, over 40 countries signed the African Continental Free Trade Area (AfCFTA) agreement. Once fully implemented, the AfCFTA is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion. This SDN takes stock of recent trade developments in Sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA, as well as challenges to its successful implementation. In addition to increased trade flows both in existing and new products, the AfCFTA has the potential to generate substantial economic benefits for African countries. These benefits include higher income arising from increased efficiency and productivity from improved resource allocation, higher cross-border investment flows, and technology transfers. Besides lowering import tariffs, to ensure these benefits, African countries will need reduce other trade barriers by making more efficient their customs procedures, reducing their wide infrastructure gaps, and improving their business climates. At the same time, policy measures should be taken to mitigate the differential impact of trade liberalization on certain groups as resources are reallocated in the economy and activities migrate to locations with comparatively lower costs.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund
Volume 2020: Issue 004