The African Continental Free Trade Area (AfCFTA) has been hailed as a catalyst to immense economic development in Africa; a flagship project of the AU’s Agenda 2063, projected to boost intra-African trade, connect over 1.3B people across 55 countries with a combined GDP of about US$3.4 trillion.West Africa is one of the fastest growing regions in Africa and is the official headquarters of the AfCFTA, located in Accra, Ghana; which is among the countries that will commence trading soon.
The region is comprised of sixteen countries which include: Burkina Faso, Benin, Togo, Nigeria, Ghana, Guinea, Mali, Cape Verde, Niger, Senegal, Sierra Leone, Gambia, Guinea-Bissau, Mauritania, Ivory Coast and Liberia. According to the 2020 World Bank Report, ’The African Continental Free Trade Area: Economic and Distributional Effects’; West Africa would see the biggest decline of an estimated 12 million people living in extreme poverty, which is a third of the total for all of Africa, upon the full implementation of AfCFTA, which commenced operations in January 2021.
The launch of the AfCFTA to promote intra-African trade in 2018.Image Source-AU
Inarguably many sectors are projected to benefit from the 90% reduction on tariffs trade pact. Africa is the continent of the future, as vast potential remains untapped. With reference to the ‘Futures Report: Which Value Chains for a Made in Africa Revolution’ prepared by the UNDP and AfCFTA Secretariat, there are opportunities that need to be seized for the One African Market such as pharmaceuticals; automotives; cultural and creative industries; cocoa; soya; leather and tanned products; Mobile Financial Services; Lithium-Ion Batteries; Textiles and Apparel; Vaccine Manufacturing. Some of the sectors projected to soar in West Africa include:
The African creative industry is booming, embracing the opportunities that steadily continue to be offered by AfCFTA. The creative economy includes film, visual and performing arts, fashion, arts and crafts, sculpturing, painting, music, culinary arts. Creative industries were the main theme for the 2022 African Trade Report, and how their potential can be fully harnessed to promote youth employment and entrepreneurship pertinently through AfCFTA. The report recommended that strategic efforts should be made, to help youth in the creative industry to tap opportunities created through AfCFTA, to tackle the persistent unemployment quagmire and help alleviate many from the poverty cycle. If fully and properly implemented the creative sector stands to gain greatly, bolstering competitiveness in different industries. AfCFTA already inspires creativity and innovation among the youth in the creative industry, which has fostered partnerships and collaborations. Several sectors under this umbrella have been projected to benefit more than others which include:
West Africa is renowned for its vibrant fashion scene, more popularly as home to the famous ‘Ankara’ brocade fabric. The business of fashion and the textile sector on the whole significantly contributes to the region’s GDP; and is projected to take off with the full implementation of the AfCFTA. West Africa’s textile and clothing industry is mainly composed of micro, small and medium enterprises (MSMEs) and generates employment for most youth and women. The Agreement is already significantly transforming the textile supply chain. Currently the region exports raw cotton and imports finished textiles.
West Africa is one of the largest cotton producing regions in the world; Benin, Ivory Coast and Burkina Faso are the sixth, seventh and eighth-largest cotton growing countries. Conversely, only two percent of locally grown cotton is turned into textiles, and the remainder is sent to other counties especially Asia. Ironically, the West-African cotton rich countries result in importing textiles, at a value estimated to be three times the value they get by exporting their cotton. However, AfCFTA is set to change the trajectory, with the reduction of tariffs by 90 per cent, the pact can greatly boost exports from the region. Upon full implementation, the industry will increase job opportunities and value-added benefits, along the cotton value chain. Furthermore, AfCFTA is set to bolster processing capacity, hence turning profits. The pact is projected to instigate the rapid increase of exports and further attract more investment in the sector.
West Africa’s vibrant fashion industry. Image Source-Voxafrica
With Ethiopia’s exclusion from the African Growth and Opportunity Act (AGOA), as of January 2022, one of the largest textile producers in Africa, due to the Tigrayan crisis; West Africa can be the alternative for global companies to settle their sourcing needs. In response to the deficit, the government of Togo and Arise Integrated Industrial Platforms under a public –private partnership opened a textile park, in June, which is estimated to make apparel worth US$1.5B. In the same breath, in neighbouring Benin, construction is ongoing to setup a textile park in Glo-Djigbe which will house up to 30 apparel factories. The Park is expected to use around 100,000 tons of locally-produced cotton, once functional.
b) Film & Cinema
The Nigerian film industry ‘Nollywood’ is the second-largest film sector globally, and the continent’s largest in terms of value, number of annual films revenue and popularity, with an annual production of around 2500 films. In 2021, it was projected to be worth US$6.4B. The AfCFTA will have profound effects on the lucrative industry, especially in terms of production and distribution.
West Africa’s Film industry to benefit from AfCFTA. Image Source-School Drillers
c) Arts & Crafts
West African art has been put on the global map through numerous channels such as the works of famous artists making record-breaking sales at auction houses abroad; such as Nigeria’s Ben Enwonwu, famous for several pieces including one dubbed as Africa’s Monalisa named ‘Christine’, which sold for US$ 1.4 M at an auction in London in 2019.In the same breath, his other piece ‘Tutu’ sold for US$1.6 M in 2018. Amoako Boafo, from Ghana, his ’Hands Up’ piece was bought at Christie’s in a Hong Kong auction for US$3.3M. To boot, the return of the ‘Abomey Treasures’, looted in the 19th century from Benin and Senegal, have cast the region’s artworks on the spotlight. Currently held in the Quai Branly Museum in Paris, French President Emmanuel Macron, acknowledged the colonial pillage and promised to facilitate restitution and repatriation of the art works back to Africa. AfCFTA is projected to further spur sales, especially with perspective to the growing number of African art collectors and the rapid mushrooming of more African art galleries and museums.
‘Hands Up’ Painting by Ghanaian artist Amoako Boafo, purchased for $3.3M at Christie’s in Hongkong,2021.Photo Courtesy-Christie’s
The E-Commerce sector is estimated to get a major boost from AfCFTA in West Africa, with already significant players like Konga illuminating the scene. Recently investors poured in US$300million into the leading omni-channel e-commerce group, which has additionally been hailed by Forbes, as the first African e-commerce player to hit profitability; with projections to attract over S$2B valuation, when it eventually decides to go public. Statistics indicate that there are about 264 e-commerce start-ups that are operational across the continent, active in at least 23 countries; with a potential to create an estimated 3 million jobs by 2025. According to estimates by Statista, the e-commerce revenue in Africa will keep increasing between 2021 and 2025; in the latter the whole sector in Africa might reach a value of over US$46.1. AfCFTA is projected to lead to the establishment of more startups, consequently availing more job opportunities and boosting revenues.
In light of this, the AfCFTA Secretariat recently launched a digital platform aimed at easing trade in the continent. The platform dubbed ’The AfCFTA Hub’, is an interconnect clearing house for national government, intergovernmental, public and private digital and partnership platforms, to link together all businesses to drive the success of the Agreement. The hub is designed to grow into a single, trusted directory of the services needed to navigate the AfCFTA for small players, such as SME’s and startups thereby making the pact more inclusive.
E-Commerce and internet usage in West Africa.Image Source-USABusiness
Inarguably, the manufacturing sector stands to get a major boost from the implementation of the AfCFTA. The trade pact seeks to spur more locally manufactured products, popularly known as ‘Made in Africa for Africans’ products. According to a recently released report by the African Export and Import Bank (Afreximbank), titled ‘Africa’s 2022 Growth Prospects: Poise Under Post-Pandemic and Heightening Geopolitical Pressures’; AfCFTA is said to be the continent’s industrial accelerator of labour-intensive manufacturing industries. The report indicated that the Agreement, would usher in a period of renaissance in African manufacturing sector, and spur economic growth in the near-term.
The report identified that manufacturing would especially play a pivotal role in West and East Africa, and would awaken the revival of industrialization of African economies and create increasingly competitive regional value chains. “AfCFTA will bolster sustained welfare improvement, with the rise of a strong manufacturing base, which has been a catalyst for increasing opportunities of labour-intensive employment, acting as a poverty exit,” stated the report.
Furthermore, it further recommended the expansion of special economic zones (SEZs), critical infrastructure to enhance manufacturing. AfCFTA’s rules of origin prioritize ‘Made in Africa’ goods; coupled with the reordering of supply chains will unveil opportunities to accelerate domestic manufacturing in support of intra-African trade.
AfCFTA is set to accelerate the manufacturing sector in West Africa. Image Source-AfDB
Agriculture remains an important economic sector in West Africa, with countries like Mali contributing 35% to the continent’s GDP. AfCFTA aims to promote agricultural transformation and provide food security, as well as improve competitiveness through regional agricultural value chains. AfCFTA seeks to boost intra-African agricultural trade, thereby stabilizing regional food supplies, and increasing resilience of markets to local production fluctuations. West Africa prioritized sorghum, aquaculture products such as fish, and livestock among others. The Food and Agriculture Organization (FAO) and the AU, recently launched a framework to support countries to adapt to the new single market; dubbed ’Framework for Boosting Intra-African Trade in Agricultural Commodities and Services’; which is also one of the seven commitments undertaken by African governments including those of West Africa, under the 2014 Malabo Declaration.
AfCFTA to boost agricultural exports in West Africa. Image Source-African Arguments.
With the projected rise of E-Commerce, manufacturing and agriculture, its estimated that warehousing will record a surge in terms of investments, upon full implementation of AfCFTA. In light of this, Kuwait-based Company ‘Agility’ is developing over 1 million sqm of warehousing across Lagos, Accra, Abidjan and Maputo, and harbours more plans to expand to other cities. In addition, its estimated that the ongoing infrastructure development along the West Africa Growth Ring; that links countries such as Ghana, Burkina Faso and Côte d’Ivoire, will result in the establishment of in excess of 1 million sqm of purpose-built warehousing, with cities such as Accra, Lagos and Abidjan projected to be the prime beneficiaries. Similarly, Nigerian company Kobo360, has expanded its services to Ghana, Burkina Faso, Ivory Coast and Togo. Through its online platforms, the logistics company aggregates end-to-end haulage operations, to help cargo recipients to achieve an efficient supply chain framework.
AfCFTA to increase warehousing demand in West Africa. Image Source-20Cube Logistics
AfCFTA is set deepen financial services in West Africa, where a large populace still remains underbanked. Amid the continent undergoing the fourth industrial revolution, coupled with increased intra-African trade, e-payments will become a mainstay. Consequently, this will register a surge in the number fintech startups, to provide safe and convenient payment solutions, to cater to consumer needs. Simultaneously, this will increase digital skills uptake.
AfCFTA set to boost financial services in West Africa.Image Source-Nyani Quarmyne