The African Continental Free Trade Area (AfCFTA) could reduce COVID-19-induced growth contraction, poverty and inequality trends and spur sustainable and inclusive growth on the continent if stronger support measures targeting women, young traders and small businesses are implemented, according to UNCTAD's Economic Development in Africa Report 2021 published on 8 December.
The report shows that trade policies alone are unlikely to support inclusive economic growth on the continent. Other measures needed to increase potential distributional gains from regional integration and help ensure inclusive development are cooperation in promoting investment and competition policies, accelerating financing of infrastructure that facilitates rural-urban linkages and providing equal access to socioeconomic opportunities and productive resources.
The AfCFTA, under which free trade officially commenced in January 2021, is one of the flagship projects of the African Union's Agenda 2063, which includes various targets on sustainable and inclusive growth. Economic growth can only be inclusive if it reduces both poverty and inequality, the report says.
"The AfCFTA has immense potential to spur economic growth and transform the continent's development prospects if additional measures are taken to realize and fairly distribute its many potential benefits, as these gains will not come automatically," said UNCTAD Secretary-General Rebeca Grynspan.
"Poverty and inequality are not inescapable. They are products of political choices and public policy. This report will support African governments and development partners to better leverage the AfCFTA to tackle both poverty and inequality to ensure the expected gains from free trade are more inclusive."
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