On Thursday, 14 July 2022, in Abidjan, the Board of Directors of the African Development Fund approved $11.02 million in institutional support for the Secretariat of the African Continental Free Trade Area (AfCFTA). This grant aims to strengthen the effectiveness of the implementation of the continental free trade market.
This funding from the African Development Fund, the concessional lending arm of the African Development Bank Group, follows an earlier support package of $5 million granted to the African Union for establishing the AfCFTA Permanent Secretariat. The Secretariat officially opened its doors on 17 August 2020 in Accra, Ghana.
The Institutional Support Project for the AfCFTA Secretariat - Phase II will build upon the results of the first phase, which focused on establishing the AfCFTA Secretariat, developing the necessary programs and tools for the AfCFTA's implementation, and raising awareness among stakeholders.
This second phase aims to encourage sustainable inter-African trade and to support African countries in increasing their share of intra-African trade. It will focus on harmonizing and integrating national and regional trade policy initiatives, advancing African trade integration, and ensuring the effective implementation of the free trade area.
The project will also include studies and initiatives to identify new trade and economic opportunities for women, assist in developing the AfCFTA Protocol on Women and Youth in Trade, and provide capacity building and targeted business skills training for women.
The project comprises three components: institutional strengthening of the AfCFTA Secretariat; support for the private sector in implementing the AfCFTA; and support for climate-resilient regional and continental value chains to enhance intra-African trade.
"The relationship between the AfCFTA Secretariat and the African Development Bank Group is crucial to the realization of greater continental trade and Africa's economic transformation. The approval of this grant by our Board of Directors today will enable the Secretariat to further ensure that trade is conducted smoothly, predictably, and freely across the continent," stated Abdu Mukhtar, Director of the Industrial Development and Trade Department at the African Development Bank.
Africa has the lowest level of intraregional trade in the world, with a rate below 18%, compared to 22% in Latin America, 50% in Asia, and 70% in Europe. Yet, with its 54 member states of the African Union and a combined GDP of approximately $3 trillion, the AfCFTA represents the world's second-largest free trade area and a potential market of 1.2 billion consumers.
The AfCFTA aims to increase intra-continental trade levels from 18% to 25% within a decade. It seeks to boost intra-African trade by $35 billion annually, reduce imports by $10 billion each year, and increase agricultural and industrial exports by $45 billion (7%) and $21 billion (5%), respectively.
Credit: AgenceEcofin