Building a Resilient Innovative Africa in a COVID-19 world

Scalability and the roleof theAfCFTA

The AfCFTA is set to create a single market with a cumulative GDP of $1.5 trillion, which together forms amongst the eight largest economies in the world. For businesses of all shapes and sizes, it provides a new continent-wide easing of trade restrictions that range from the harmonization of standards to relaxations on travelling across borders. Akhanoba says that the AfCFTA is a step in the right direction as the large corporates will now be able to grow their own intra-African markets, and value chains will increase in volume and quality. According to him, researchers have indicated that the Services industry, for example, loses $80 billion every year from importing services from abroad when they are readily available in a neighboring African county. The AfCFTA is therefore an opportunity to educate entrepreneurs about the new single market and what goods and services are available for cross-border enterprise. However, experts we spoke to includingAkhanoba have also pointed out that because theAfCFTA is designed to cater towards the formal sector, the vast majority of African SMEs who run small businesses in the informal sector are likely to be left out initially - until measures are taken to specifically address the needs of the many millions working in the informal sector. Potential measures range from incentivizing informal SMEs to make it attractive for them to formalize to harmonizing fiscal policies particularly in sales and corporation taxes as well as import duties, creating regulations and guidelines to simplify business registration processes, including language barriers, and minimizing bureaucracy. These measures would truly help SMEs operating in the informal sector.


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