Mitigating short-term adjustment costs: Preparing for the AfCFTA

January 4, 2021 Brookings 0 Comments

Trading under the African Continental Free Trade Agreement (AfCFTA) officially commences this Friday, January 1, 2021, after years of ambitious planning and negotiations and in the face of the COVID-19 pandemic. Optimistic experts and policymakers believe that the AfCFTA has the potential to transform and position Africa as an increasingly dynamic force on the international stage. Indeed, economic models show that the development impact of the trade agreement will be positive and significant. The AfCFTA will strengthen the bargaining power of Africa in international trade negotiations, shifting the boundary of fair trade for a more inclusive process of globalization. Wages should increase for skilled and especially unskilled workers in a shift toward a more inclusive growth model. Intra-African trade could increase by half or even double within the decade if there is a true effort to cut red tape at borders and lift other major constraints such as those on the supply side and in infrastructure. Read More.

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