Following its implementation at the start of this year, the African Continental Free Trade Area (AfCFTA) has transformed Africa’s small, fragmented and often landlocked markets into the largest free trade area globally, comprising 1.2 billion people and valued at approximately $3.4 trillion. By removing trade barriers and fortifying regional value chains, the agreement aims to boost Africa’s trading position in the global market and enable the free movement of goods, services and people across the continent. In addition to accelerating intra-African trade, which is estimated by the U.N. Economic Commission for Africa to increase by 15-25% by 2040, the AfCFTA is set to facilitate Africa’s trade with global trading partners.
For U.S. companies, the African continent is one of the youngest and fastest-growing consumer markets globally and represents a vast export market for American goods and services. The AfCFTA harmonizes policy and regulatory regimes across African markets – not to mention abolishes tariffs on 90% of goods produced on the continent – thereby reducing the cost of transactions for foreign and domestic players alike. Key sectors open to U.S. participation include healthcare, pharmaceuticals, automobiles, agro-processing and financial technology, with African health systems already receiving an influx of essential products, vaccines and medical equipment manufactured in the U.S. during the COVID-19 pandemic.
For African countries, the AfCFTA enables the continent to better take advantage of growth opportunities in the global market and forge strategic partnerships with the U.S. and other foreign players. As countries increasingly seek to diversify their sourcing and production in the wake of COVID-19 and disruptions to global supply chains, Africa is emerging as an alternative supplier of strategic minerals and inputs, with refining and manufacturing industries anticipated to grow substantially under the trade agreement. Increased economies of scale and heightened productivity under the AfCFTA are set to reconfigure global supply chains and reduce existing macroeconomic imbalances and trade deficits between Africa and its developed-nation trading partners. This is a particularly salient point for the U.S., as it escalates its trade war with China. Furthermore, the U.S. can harness Africa’s unique geographic position to leverage the continent as a strategic base, from which American companies can trade with other regions, including Europe and Asia.
Finally, the AfCFTA presents opportunities for the widespread adoption of Fourth Industrial Revolution technologies and the digitalization of intra-African trade, in which U.S. technology firms can play a major role. Sectors including ICT, digital platforms, electronic trade and transaction systems are highly prospective for American companies seeking to invest or expand their investments in Africa, coupled with opportunities to accelerate e-commerce platforms and digitalize existing sectors in banking, retail and public services.
Energy Capital & Power (ECP) – in partnership with the African Energy Chamber’s U.S.-Africa Committee – invites U.S. companies, investors and organizations to participate in the first-ever U.S.-Africa Energy Forum (USAEF) (December 9-10, 2021, Houston, Texas), introducing American companies to African opportunities. To learn more about how U.S. firms can advance the agenda of sustainable, long-term investment in African energy, please visit www.energycapitalpower.com. To sponsor, speak or attend USAEF 2021, please contact Senior Director James Chester at firstname.lastname@example.org.