SPECIAL FEATURE
The ultimate impact of AfCFTA will depend on how effectively member countries cooperate to maximize its benefits.
• Implementation challenges: The success of AfCFTA depends on effective implementation, which can be challenging given variations in regulatory environments, infrastructure deficits and bureaucratic hurdles in different African countries. • Infrastructure gaps: Inadequate transportation and logistics infrastructure can hinder the smooth movement of goods and services, offsetting some of the benefits of increased trade. • Non-tariff barriers: While tariffs are a visible trade barrier, non-tariff barriers, such as regulatory
budgets that are already strained from several years of above-trend spending due to COVID-19-related support and more recently the need to increase price subsidies caused by the spike in global food and fuel prices driven by the war in Ukraine. • Competition and Adjustment: Some domestic industries may struggle to compete with foreign products, potentially leading to job losses and the need for transitional policies to support affected workers with associated fiscal costs.
• Weaker economies: Smaller and less-developed economies may face challenges in adapting to increased competition and there is a risk that the benefits of AfCFTA may be unevenly distributed across the continent. • Political and security issues: Political instability and security concerns in certain regions can disrupt trade and economic activities.
Challenges At the same time, policy measures will need to be taken to mitigate the differential impact of trade liberalization on certain groups as resources are reallocated in the economy and
differences and customs delays, can continue to impede trade.
THE WAY FORWARD... The ultimate impact of AfCFTA will depend on how effectively these challenges are addressed and how the member countries cooperate to maximize the benefits of the agreement. Properly managed, AfCFTA can help African countries harness their economic potential, boost trade, and reduce poverty. However, addressing challenges and ensuring that the benefits are widespread and sustainable will require concerted efforts by African governments, international organizations and the private sector in order to maximize the positive impact that can be realized.
activities migrate to locations with comparatively lower costs.
While the AfCFTA agreement has the potential to bring significant benefits, it also faces challenges, including the need for effective implementation, addressing regulatory and logistical barriers and promoting cooperation among member countries.
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