The Board of Directors of the African Development Fund has approved an $11.02 million support package to the Permanent Secretariat of the African Continental Free Trade Area (AfCFTA).
The AfCFTA Secretariat opened its doors in Accra, Ghana, on August 17, 2020, with initial support of $5 million to set up the Secretariat, the programs, and the tools and to raise stakeholder awareness.
Prudence Sebahizi, the chief technical adviser on AfCFTA, told Doing Business that the Bank’s latest support comes along other financial supports from member states and other partners to strengthen AfCFTA implementation.
“The funding is mainly aimed at strengthening AfCFTA institutions through technical assistance and capacity building. However, more support is required to fund private sector projects and member states’ programs,” Sebahizi said.
“The private sector with benefit through capacity building programs and technical assistance. In addition, studies will be conducted to identify market opportunities for businesses.”
Studies and initiatives will be undertaken to identify new business and economic opportunities for women, to help develop the AfCFTA Women and Youth in Trade Protocol, and to support capacity building and targeted business skills for women.
Wamkele Mene, Secretary-General of the AfCFTA Secretariat, on June 7, stressed that in order to support the implementation processes, Regional Economic Communities need to make informed choices about how to reap the benefits presented by the agreement.
Abdu Mukhtar, Director of the Bank’s Industrial Development and Trade Department, said: “Our Board’s approval of this grant will enable the Secretariat to further ensure that trade is conducted in a harmonious, predictable and free manner on the continent.”
The world’s second-largest free trade area has a potential market of 1.2 billion consumers, but Africa has the world’s lowest level of intraregional trade at less than 18%, compared with 22%, 50% and 70% for Latin America, Asia, and Europe respectively.
As noted, the AfCFTA aims to increase this by up to $35 billion per year (25%) over a decade, lower annual imports by $10 billion, and boost agriculture and industrial exports by up to $45 billion (7%) and $21 billion (5%) respectively.
The second phase of support continues to aim to encourage sustainable intra-African trade and to increase the share of African countries participating in it. It intendeds to move the African trade integration agenda forward by enabling the secretariat and the countries of the zone – especially transition countries – to harmonize and integrate national and regional trade policy initiatives.
The support will be structured under three components: institutional strengthening of the AfCFTA Secretariat; private sector support to implement the AfCFTA, and support of climate-resilient regional and continental value chains to boost intra-Africa trade.
As noted, the Bank’s support to the AfCFTA Secretariat will enable it to build the capacity of the private sector to trade effectively within the African free trade market framework.
The Economic Commission for Africa (ECA), on May 15, launched the first-ever comprehensive tool – the AfCFTA Country Business Index (ACBI) – that measures how easy, or hard, it is to do business between African countries.
The ACBI has three key objectives including assessing the perceived impact of the African Continental Free Trade Area on the private sector’s ability to trade and invest across African borders once the Area is operational.