Sign up to receive free electronic notifications when new country series and/or articles are published on the IMF website. The IMF therefore believes that it is essential to take seriously the concerns of the weaker nations in order to make progress in the further negotiations. But these countries are particularly likely to take protectionist positions and will be reluctant to open up their own markets, not least because they fear increasing competition within a free trade area. Efforts have been made to address these concerns in discussions with “special and differential treatment” for the weakest countries. The AfCFTA least developed countries have already obtained the concession to gradually reduce their tariff reductions over a period of thirteen years instead of ten. However, special treatment does not automatically apply to derogations from market opening; Interested countries must prove their eligibility on the basis of specific criteria. This increases the risk that countries with weak administrative and financial capacities will find it difficult to request and maintain their special treatment and that they will simply not meet their obligations to open their markets. The political momentum towards Africa-wide free trade has intensified. In March 2018, more than 40 countries signed the African Continental Free Trade Area (AfCFTA) agreement. Once fully implemented, the AfCFTA is expected to cover the 55 African countries whose combined GDP was close to $2.2 trillion. This SDN takes stock of recent developments in trade in sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA as well as the challenges of its successful implementation. In addition to increasing trade flows for both existing and new products, the AfCFTA has the potential to generate considerable economic benefits for African countries.
These benefits include increased revenues from improved efficiency and productivity through improved resource allocation, increased cross-border investment flows and technology transfer. To ensure these benefits, in addition to reducing import duties, African countries also need to reduce other barriers to trade by making their customs procedures more efficient, reducing their major infrastructure gaps and improving their business climate. At the same time, policy measures should be taken to mitigate the differences in the impact of trade liberalization on certain groups, as resources are redistributed in the economy and activities move to sites with relatively lower costs. There are many good reasons to conclude the AfCFTA. It is precisely in small African economies such as Namibia, which has a population of about 2.5 million, that market expansion within the framework of an industrial free trade area would allow economies of scale. They are potentiated by the constellation of a growing middle class within a rapidly growing population. According to United Nations estimates, Africa`s population is expected to double to about 2.6 billion by 2050. The share of intra-African imports in total African imports has almost tripled over the past two decades to about 13% ($73.6 billion). These encouraging developments, however, hide very different trends in the different subregions.
While South Africa alone is the source of 35 per cent of intra-African exports and receives 15.5 per cent of intra-African imports, other important countries are poorly integrated. Algeria, Egypt and Nigeria together account for half of Africa`s GDP, but participate only marginally in intra-African trade, which accounts for only 11% of their imports and exports. On the other hand, SADC is highly integrated, as its members exercise a significant share of their trade with each other (20%). . . .