The majority of African business leaders are confident in the African Continental Free Trade Area's (AfCFTA) potential to significantly enhance intra-African trade, although many feel poorly informed about the opportunities the agreement provides.
According to the PAFTRAC Africa CEO Trade Survey Report 2022 - Assessing the Impact of the AfCFTA on African Trade, published on 17 June, 93% of African CEOs believe the AfCFTA will increase intra-African trade. This marks an improvement from the 86.7% recorded in the 2021 survey.
Titled “PAFTRAC Africa CEO Trade Survey Report 2022 – Assessing the Impact of the AfCFTA on African Trade,” the report was conducted with input from over 800 African CEOs across 46 countries between March and June 2022.
Out of the CEOs who showed confidence, 26% were "very confident" in the AfCFTA’s potential.
Business leaders cited several benefits they expect from the agreement, including the opening of new markets for goods and services (19.6%), increased opportunities for regional exports (16.6%), attraction of investment to expand businesses regionally (14.6%), creation of regional industrial clusters (14.6%), reduction in operational costs (12.3%), and simplification of export documentation (11.3%).
On one hand, 70% of surveyed CEOs described the impact of the AfCFTA on their businesses as positive or very positive, highlighting their confidence in their companies' ability to remain competitive and thrive in a more open market environment. However, 28% were ambivalent about the agreement's impact, believing it would neither benefit nor harm their businesses.
Lack Of Information About Opportunities Available
Meanwhile, 4% of CEOs felt the AfCFTA had or would have a negative impact on their companies, largely due to concerns about heightened competition following the removal of trade barriers and other forms of protectionism. This figure marks a slight increase from the previous survey (2.2%).
When asked about the main barriers preventing them from exporting to other African countries, the CEOs identified several key challenges such as lack of market and opportunity information (18%), lack of information on trading partners (13.6%), counterparty payment risk (9.6%), security and safety concerns (9.3%), unfair competition and subsidies (7.3%), transportation and logistics infrastructure or services (6.4%), political stability (5.9%), high tariffs (5.9%), lengthy customs procedures (5.7%).
The survey also revealed that African CEOs remain poorly informed about the opportunities presented by the AfCFTA. In response to the question, "Do you know where and how to access useful information about the AfCFTA?", 38.62% answered yes, while 61.38?mitted they did not. This underscores the need for greater efforts to disseminate relevant information to economic operators.
The Pan-African Private Sector Trade and Investment Committee (PAFTRAC) serves as a platform that unites African private sector leaders. It provides a forum for advocacy, bringing together private sector actors and African policymakers to promote extra- and intra-African trade, investment, and pan-African enterprise.
Credit : Agence Ecofin