AfCFTA Window: Unpredictable global trade reveals AfCFTA benefits

As disruptions in the global trade routes, such as the Red Sea shipping route, continue to increase shipping times and freight rates, the African Continental Free Trade Area (AfCFTA) emerges as a silver lining for businesses. Standard Bank sees the AfCFTA agreement as an avenue for alternative business opportunities amidst the current uncertainties in global trade. With a population of 1.3 billion people in Africa and a combined gross GDP of approximately $3.4 trillion, the AfCFTA offers promising prospects for buying and trading goods both now and in the future. Philip Myburgh, the Executive Head of Africa Trade at Standard Bank Group, emphasizes the potential benefits of engaging in trade under the AfCFTA agreement. Myburgh highlights that the disruptions in trade routes like the Red Sea and ongoing challenges in supply chains have generated interest in diversifying supply chains. The AfCFTA presents an opportunity for businesses to explore alternative supply chain options within Africa. While the transition to new supply chains may be gradual, the impact of disruptions in major trade routes, such as the Suez Canal, has been significant on businesses relying on timely shipments. The recent uptick in AfCFTA participation, including the addition of South Africa and Ghana to the Guided Tariff Initiatives (GTI), indicates a positive trend. Transactions between South Africa and Ghana, involving exports of mining equipment and goods like fridges and tea, demonstrate progress towards the AfCFTA's goal of establishing a single trade market in Africa. Small advances in intra-Africa trade contribute to the overarching objective of increasing trade by 50% and lifting 50 million people out of poverty by 2025. Moreover, leveraging digital trade services and innovative technologies, such as artificial intelligence (AI) and blockchain, Standard Bank aims to enhance trade facilitation and address infrastructure challenges. By utilizing technology for payment settlements and matchmaking between businesses, Standard Bank endeavors to streamline trade processes, making trading easier, faster, and more cost-effective for African businesses. The successful implementation of technologies like blockchain has enabled substantial payment settlements and fostered thousands of successful matches between businesses across the continent. Looking ahead to 2024, Standard Bank remains optimistic about the growth of intra-Africa trade corridors and increased client engagement. The guided tariff initiatives, allowing more countries to trade at reduced tariffs, are expected to stimulate further growth in intra-Africa trade. Despite challenges in economic integration in certain regions, such as West Africa, overall progress in trade integration and collaboration within regional trade communities bodes well for the future of trade under the AfCFTA agreement. In conclusion, the AfCFTA presents a promising avenue for businesses to navigate uncertainties in global trade and explore new opportunities within the African market. Standard Bank's strategic focus on leveraging technology and fostering trade relationships underscores the potential for sustainable growth and economic development through intra-Africa trade under the AfCFTA agreement.