AfCFTA, now the biggest Free trade Area on the Planet, will also create major new economies of scale. The signatory countries together command a combined GDP of $2.5 Trillion and an aggregate population of more than a billion, most of them are less than 25 years old and anyone with teenage children will need no persuasion of the terrifying consumer potential of a listless adolescent with a smart phone and a credit card. Bringing that scale of demand together in a single unified trading block brings unprecedented opportunities for growth.
Even the normally curmudgeonly IMF have broken cover in Washington and predicted the new Trade Treaty is likely to increase aggregate GDP across sub Saharan Africa by up to 4% next year. That’s nearly four times the United Kingdom’s projected growth over the same period, with or without welsh lamb on the menu…
Bear in mind too that over recent years a mere 15% of goods and services produced in Africa have been consumed in other African states: a whopping 85% of it is sent abroad as is the lion’s share of divided yields and profits from the subsidiaries of scores of foreign companies dotted over the continent. No other market worldwide suffers from that level of encroachment and the problem is most indigenous African companies are too small to compete head to head with the multinationals and unlike the multinationals they suffer disproportionately from the historic limitations of Africa’s infrastructure. For example, not all railway gauges across the Continent are the same so it’s often necessary to unload and re-load goods in transit when they arrive at internal borders, an added delay and expense that can make the difference between surviving and shutting up shop for a small business.
Infrastructure barriers and blockages of this kind means it costs as much to send a box of spanners from Nairobi to Accra as it does to fly engine parts from Moscow to New York.
This too will now be addressed by AfCFTA: the Treaty will align regulatory and logistical systems so as to make intra territorial trade more efficient (and cheaper). Even the grouchy old IMF is predicting inter African commerce will increase as a result by as much as a third and the beneficiaries of that will be the African business who have lost out historically so keeping more of Africa’s wealth in Africa.
The SLC African Fund aims to build on the opportunities offered by sub-Saharan African Markets and deliver long term capital growth as well as income distribution: working to solve social and environmental challenges and at the same time deliver sustainable profits for investors.
I’ve been aware for some time of the huge disparity between retained and exported profits across sub Saharan Africa, which is why through the initiatives supported by the SLC African Fund I hope in time to even those out in favour of local producers.
And I’m delighted this ambition has now been made easier by the new AfCFTA Trade treaty.
This initiative has a significant and real potential for securing resilient and robust increased growth, better infrastructure and logistics and more opportunities across the Continent.
I for one will certainly be supporting its commendable work and objectives.