The full implementation of the African Continental Free Trade Area (AfCFTA) agreement is projected to increase real incomes by 7 per cent or nearly $450 billion.
At the World Economic Forum 2024, President Paul Kagame reiterated the imperativeness of partnership between the private sector and the public sector in a manner that helps change the narrative about Africa being too risky a continent.
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Kagame was addressing the Forum of Friends of the AfCFTA held under the theme "Driving Action under the African Continental Free Trade Area” where an action plan to "Accelerate Global Business and Investment in Africa” report was also launched.
The Forum partners committed to contribute to projects and investments in four key sectors that will spur socioeconomic transformation on the continent, under the AfCFTA.
Agriculture and agro-processing
Intra-African trade in agriculture is expected to increase by 574 per cent by 2030, if tariffs are eliminated under the AfCFTA.
The agriculture and agro-processing industry plays a critical role in Africa’s economic transformation, a continent grappling with food insecurity yet endowed with resources for large-scale production.
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The report indicates that opportunities for private sector investment abound in agriculture’s long value chain, whether from fertilisers and irrigation for farming, or value-added processing, through storage and delivery to the end consumer.
Including also an investment to develop and deploy accessible and affordable digital agritech tools, especially those of smallholder farmers.
"Overall, the goal is to work towards transforming the agriculture and agro-processing industry to meet domestic food security and ultimately become a global food exporter by 2050, requiring public-private partnerships.”
Transport and logistics
With the increase of intra-African trade demand by 28 per cent, it means the need for almost two million trucks, 100,000 rail wagons, 250 aircraft, and more than 100 vessels by 2030, it states.
"As trade volumes increase due to the AfCFTA, the transport and logistics industry is in high demand, leading to important opportunities for the private sector. To meet rising demand in freight, air, and maritime transport, connecting local and international companies to the continental market is paramount.”
It highlights different projects aimed at consolidating investments in ports, warehouses, and logistics centres across the continent, and programmes designed to develop skills for students and business professionals in various areas from packing and branding to supply chain management.
Automotive
The nascent automotive industry in Africa is expected to grow to more than $42 billion by 2027, presenting the potential for more countries to be involved in the value chain and for the continent to take the lead in the production of electric vehicles (EVs).
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Africa holds 19 per cent of the world’s critical minerals and metals required for building EVs.
"While electric vehicles make up a small proportion of Africa’s current automotive production and sales, demand is increasing, especially as some of the continent’s main trading partners have implemented bans on internal combustion engine vehicles going into effect as early as 2035,” reads part of the report.
With this in mind, industry captains and African leaders have taken measures to rescue the continent from being a dumping site for used vehicles which contribute heavily to carbon emissions, while investing in capacity-building to be able to manufacture between four and five million vehicles by 2035, which could translate into more than 20 additional full-size manufacturing plants on the continent.
Pharmaceuticals
Another fast-growing industry that African leaders are keen on boosting because of the sense of urgency it holds is the pharmaceutical industry.
Africa imports more than 70 per cent of the medications it needs at a cost of up to $14 billion annually, while it only manufactures one per cent of the needed vaccines.
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Through the harmonisation of regulations and the lifting of trade barriers provided by the AfCFTA, the pharmaceutical industry is expected to develop quickly to meet local demand, facilitated by different institutions established to fast-track the development.
To achieve pharmaceutical sector competitiveness and sustainable access to healthcare, vaccine manufacturing plants are being developed in different African countries, the African Pharmaceutical Technology Foundation (APTF) for promoting technological use in the medical ecosystem, and the African Medicine Agency as a regulatory body for medical products, among others.