The African Continental Free Trade Area in a Covid-19 time : macroeconomic and sectoral impacts

The African Continental Free Trade Agreement is seen as one of the possible response for the continent to the COVID-19 crisis’ economic impact. Building long term continental resilience and improving volatility management, through accelerated export diversification in an increased intra Africa trade could be achieved through a rapid and ambitious implementation of the AfCFTA. This paper analyzes the impacts of the Covid-19 crisis in a context where African countries are preparing to make the continental free trade area effective. Against a unique Covid-19 time that will strongly transform production and trade processes across the world, the paper explores to what extend a rapid implementation of the AfCFTA, supported by Trade Facilitation reforms could play a key role in mitigating the severe economic consequences of Covid-19. Our results indicate that maintaining the momentum towards an ambitious AfCFTA’s implementation is crucial as several African countries will face a strong negative economic impact. Indeed, a successfully implemented AfCFTA will empower the region to more successfully navigate the hit the region’s economies will take (and are already taking). In the case of an immediate implementation for all African countries the drop in Africa’s GDP would be significantly mitigated. The decreasing world demand is then partially compensated by new export possibilities across the continent for African economies, due to the removal of intra-African trade tariffs. African countries might consider supporting immediate trade facilitation measures, and more fundamentally address facilitation along the entire length of corridors across the continent. These moves would counter-balance the rising trade costs, improve the capacity of African countries to better benefit from the re-organization of GVCs, and strengthen RVCs—thus mitigating economic and social impact of the crisis, through new business opportunities.