The AfCAFTA, established in 2018, will create the world's largest free trade zone, bringing transformative changes and enormous opportunities to African economies and business environments. Its adoption and implementation will accelerate intra-African trade and develop regional and local value chains, creating new business dynamics that will provide investors with access to a population of 1.7 billion people with combined business and consumer spending reaching 1Q4Q6.7 billion by 2030.
Global companies have an important role to play in accelerating the implementation of the AFCA, according to a new report from the World Economic Forum, in collaboration with the AFCA Secretariat and Forum partners. The report presents sectors with high potential, initiatives to support business and investment, operational tools to facilitate the AFCA and illustrative examples of successful companies in Africa to guide companies in their successful entry and expansion in this area.
The ZLECAf Secretariat selected four key sectors that represent high potential opportunities for companies seeking to invest in Africa: the automotive industry, agriculture and agro-processing, the pharmaceutical industry and transport and logistics. These four sectors are expected to see a rapid acceleration in production and trade volumes under the AFCA, as they have high potential to meet local demand with local production. So far, local demand for these goods and services is being met through relatively expensive imports, despite the region's growing and lower-cost production capacities.
While the AfCAFTA offers business opportunities in each of these four sectors, companies will also need to understand how the changing environments under the trade agreement will affect their strategies to succeed in the region. The World Economic Forum is actively working on the implementation of trade and investment tools that are aligned with the AFCA negotiation process, identifying areas where public-private collaboration can help reduce barriers and facilitate investment by international companies.
For example, public-private collaboration focused on the implementation of AFCA trade facilitation provisions can streamline the exchange of goods, on-the-ground initiatives can address fragmented investment regulatory frameworks and the bringing together of groups committed to 4IR technology. , digital payments and information exchanges can support digital commerce. To improve the social outcomes of trade, the Forum's Inclusive Trade Initiative is uncovering best practices that can be shared with AFCA negotiators and businesses. And an inventory of 25 key climate technologies and country-specific studies helps identify opportunities for trade to align with circular economy goals.