AfCFTA critical for inclusive economic growth in Africa - UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) recently released the Economic Development in Africa Report 2021, highlighting the potential of the African Continental Free Trade Area (AfCFTA) to drive inclusive economic growth on the continent. In an exclusive interview with CNBC Africa, UNCTAD Secretary-General Rebecca Grynspan emphasized the critical role of inclusive growth in reducing poverty and inequality and fostering sustainable development across African nations. Grynspan emphasized the importance of inclusive growth, stating that economic development must prioritize reducing poverty and inequality to ensure long-term stability and prosperity. She noted that while Africa has experienced economic growth, achieving inclusive growth has been a persistent challenge. Factors such as commodity dependence and limited sectoral diversification have hindered progress towards inclusivity, leaving many African countries struggling to simultaneously reduce poverty and inequality. The COVID-19 pandemic further exacerbated existing inequalities in Africa, causing a significant economic downturn and impacting marginalized populations. Grynspan highlighted the detrimental effects of the pandemic on informal sectors and vulnerable groups, with millions of people in Sub-Saharan Africa facing extreme poverty. The lack of universal vaccine access has widened global disparities, with advanced countries vaccinating at a faster rate compared to developing nations. Amid these challenges, Grynspan underscored the untapped potential of the AfCFTA in driving intra-African trade and economic growth. She projected that the AfCFTA could increase intra-African trade to 43%, significantly higher than the current rate of 14.4%. The agreement has the potential to generate trillions of dollars in additional revenue for African countries, offering a pathway to achieve the Sustainable Development Goals (SDGs). While acknowledging the concerns about practicality, Grynspan emphasized the long-term vision required for the AfCFTA to succeed. Drawing parallels with integration processes in other regions, she highlighted the benefits of regional trade in enhancing productive capacities and creating opportunities for small and medium-sized enterprises. She urged African nations to maintain a commitment to the AfCFTA, despite the inevitable challenges on the path to implementation. Addressing the substantial informal cross-border trade in Africa, particularly driven by women, Grynspan emphasized the need for innovative solutions to formalize and support informal traders. Leveraging digital tools and simplifying trade rules can empower informal traders to enhance their competitiveness and productivity. By reducing transaction costs and implementing efficient border processes, African nations can harness the economic potential of informal cross-border trade and uplift vulnerable households and communities. In conclusion, Grynspan's insights shed light on the transformative impact of the AfCFTA in advancing inclusive economic growth in Africa. While the road ahead may be challenging, embracing a long-term vision and strategic approach can unlock the full potential of the AfCFTA and drive sustainable development across the African continent.