SA's Davies clarifies the benefits of AfCFTA

Dti minister Rob Davies.

South Africa's Trade and Industry Minister, Rob Davies, on Monday said the African Continent Free Trade Area (AfCFTA) would boost intra-Africa trade and create a bigger market of over a billion people.

Davies was speaking at a media briefing held in Pretoria on Monday, where he gave a breakdown on the launch of the AfCFTA by the African Union (AU) Extraordinary Summit that took place in Kigali, Rwanda last week.

AfCFTA is aimed at deepening African economic integration, promoting agricultural development, food security, industrialisation and structural economic transformation through a single-air continental transport market with free movement of persons, capital, goods and services.

Davies clarified the implementation process and how the AfCFTA, which was signed by 44 countries, would benefit South Africa. 

He said liberalising trade between two or more countries generally has positive welfare effects for those countries and leads to economic growth and poverty reduction.

"The AfCFTA is an economic imperative to address the challenge of small and fragmented markets. It is expected to generate significant economic opportunities," Davies said.

"AfCFTA will reduce tariff revenues collected by African countries on intra-African trade. By reducing tariffs, the CFTA will make it more affordable for informal cross-border traders to operate through formal channels. The CFTA can further support this group with trade facilitation and trade information measures."

He explained that special measures were required for vulnerable groups that could be hurt by such adjustments saying, "The AfCFTA and its accompanying measures will ensure that these groups share the gains of the CFTA and are protected where necessary."

"The AfCFTA will imply structural adjustment costs in the short run as economies undergo structural change, with factors of production shifting across sectors to align with new trading opportunities and competition," Davies said.

The policy was designed so that it was a "win-win" for all Africa's diverse range, he added.


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