On Thursday, 14 July 2022, the African Development Fund’s Board of Directors approved $11.02 million in institutional support for the African Continental Free Trade Area (AfCFTA) Secretariat. This grant is intended to enhance the implementation of the continental free trade market.
The African Development Fund, the concessional financing window of the African Development Bank Group, continues its momentum from an earlier $5 million grant to the African Union, which supported the establishment of the AfCFTA Permanent Secretariat. The Secretariat officially opened on 17 August 2020 in Accra, Ghana.
The Institutional Support Project for the AfCFTA Secretariat - Phase II seeks to consolidate earlier progress. The first phase focused on setting up the Secretariat, establishing implementation tools, and raising stakeholder awareness.
This second phase, aimed at fostering sustainable intra-African trade and increasing the share of African countries in intra-African commerce, seeks to accelerate the effective implementation of the AfCFTA. It focuses on enabling both the Secretariat and the countries within the zone—particularly those in transition—to harmonize and integrate national and regional trade policy initiatives. Additionally, it aims to advance African trade integration through the effective application of the free trade area.
The project plans to undertake studies and initiatives to identify new trade and economic opportunities for women, assist in the development of the AfCFTA Protocol on Women and Youth in Trade, and support capacity building and the acquisition of targeted business skills for women.
The project is structured around three components: institutional strengthening of the AfCFTA Secretariat, support for private sector engagement in AfCFTA implementation, development of climate-resilient regional and continental value chains to promote intra-African trade.
Abdu Mukhtar, Director of the Industrial Development and Trade Department at the African Development Bank, highlighted the importance of this initiative. “The relationship between the AfCFTA Secretariat and the African Development Bank Group is crucial to realizing greater continental trade and Africa's economic transformation. This grant will further ensure that trade is conducted smoothly, predictably, and freely on the continent,” he stated.
Africa’s intra-regional trade stands at less than 18%, significantly lower than other regions such as Latin America (22%), Asia (50%), and Europe (70%). With 54 African Union member states and a combined GDP of approximately $3 trillion, the AfCFTA aims to boost intra-African trade from 18% to 25% within a decade.
The AfCFTA is projected to generate $35 billion in annual intra-African trade, reduce imports by $10 billion annually, and increase agricultural and industrial exports by $45 billion (7%) and $21 billion (5%), respectively.
Credit: AgenceEcofin