Advancing AfCFTA implementation strategy

Although the African Continental Free Trade Area (AfCFTA) raises great expectations for the development of the African continent, the low level of intra-African trade remains a key problem in terms of promoting diversified production and value-added products. In this regard, African experts and policymakers emphasize that effective realization of the AfCFTA would be a game changer in promoting the production and export of a larger variety of products among nations of the continent.

At present, the share of the intra-African market is significantly low. Most countries largely depend on cash crops or a few specialized products as a source of their exports. This limited production base subsequently restricts the possibility of undertaking a large volume of trade among the countries.

One of the moves that would address this problem is to focus on technology transfer and agro-processing. Africa, as a continent with vast agricultural and raw materials, has a lot to gain by ensuring that it adds value to its exports. Using such raw materials on the continent, African countries will be able to produce finished and semi-finished products, and then they can trade them with each other, thus increasing the African continent’s market share and spurring economic growth to a large extent. This change not only generates value to African economies but also generates employment, as well as industrialization.

This continental initiative is also regarded as a very important step to attain the intended interconnectedness agenda by the continent, despite the existing production constraints under the AfCFTA arrangement. Numerous nations are striving to facilitate their domestic drives to fit into the aims set by the AfCFTA through their policies and infrastructural systems.

In this regard, Ethiopia stands out as a proactive participant in this continental endeavour. The East African nation has been working tirelessly to leverage the AfCFTA, starting from its early ratification of the agreement. Beyond ratification, Ethiopia has been actively engaged in constructing necessary infrastructure and enacting policy amendments designed to facilitate seamless integration into the continental trade bloc.

In a significant recent development, Ethiopia successfully concluded a validation workshop for its AfCFTA Implementation Strategy. This crucial step marks the finalization of the country’s comprehensive roadmap for engaging with the continental trade framework, signalling Ethiopia’s readiness to play a pivotal role in realizing the AfCFTA’s vision of a prosperous and interconnected Africa.

The workshop, co-organized by the United Nations Economic Commission for Africa (UNECA) and Ethiopia’s Ministry of Trade and Regional Integration, brought together stakeholders from government, the private sector, and multilateral institutions.

In his opening remarks, Minister of Trade and Regional Integration Kassahun Gofe described the workshop as a vital milestone in Ethiopia’s journey to effectively implement the AfCFTA agreement. He emphasized that the signing and ratification of the AfCFTA in 2019 represented a shift from a cautious trade stance to a more open, opportunity-driven approach.

“Ethiopia views the AfCFTA not just as a trade agreement but as a transformative development compact,” Minister Kassahun stated, highlighting its potential to diversify partnerships and unlock new opportunities across Africa. The validated strategy closely aligns with Ethiopia’s Homegrown Economic Reform Agenda, particularly its second phase, which prioritizes structural reforms to enhance economic resilience and foster private sector growth.

The minister pointed to recent liberalization initiatives, including legislation allowing foreign banks, reforms in telecommunications, and the easing of foreign ownership restrictions in logistics and transport, as key supports for Ethiopia’s integration efforts. “Regional integration is at the core of Ethiopia’s transformation strategy,” he noted, underscoring the need for deeper market integration to achieve industrialization.

Minister Kassahun also reported positive economic indicators, with Ethiopia’s GDP growing by 8.1 percent in the 2023/24 fiscal year and export earnings surpassing 8 billion USD. However, he acknowledged challenges, including a significant trade deficit, highlighting the need for improved productivity and trade integration through frameworks like the AfCFTA.

Concluding his remarks, he called for coordinated investment and shared accountability to ensure effective implementation. “We must act decisively to unlock our potential and shape the future trajectory of AfCFTA for the benefit of our nation and the continent,” he urged.

Policy Study Institute Director-General Fikadu Tsega noted that the draft strategy had been thoroughly reviewed and emphasized that successful implementation will require coordinated efforts across all stakeholder levels. “PSI is committed to supporting the implementation of the strategy and the AfCFTA agreement,” he pledged.

The Ethiopian government is eager to leverage the AfCFTA Agreement to transform the country’s trade and economic landscape, with a focus on structural reforms aimed at enhancing resilience and encouraging private sector-led development.

The successful implementation of such national strategies, coupled with a concerted effort towards diversified production and value addition, will be instrumental in unlocking the full potential of intra-African trade for the benefit of all.

It is well known that the African Continental Free Trade Area (AfCFTA) remains a key pillar of the ambitious Agenda 2063, the continent’s development blueprint. The AfCFTA will open the huge economic potential of Africa through intra-African trade and socio-economic development, and this project was approved at the 18th Ordinary Session of the Assembly of Heads of State and Government held in January 2012. By the middle of 2025, the progress, although it has already been significant, still faces tremendous challenges towards the achievement of an actual united African market.

The vision of AfCFTA, which is a 1.4 billion Population market with a total GDP of 3.4 trillion, takes a clear direction to enhance intra-African trade, by breaking down trade barriers, especially on value-added products, and enhancing the powers of Africa in world trade negotiations. The formal target date of enforcement of this agreement was 2019, and trading first began on January 1, 2021. It is a big transformation to note that 48 of the African countries have ratified the agreement, showing a determined willingness to transform.

The implementation of the AfCFTA is also anticipated to enhance intra-African trade by the year 2045, which will lead to a raise in the value of cross-border trade by 275.7 billion dollars. It is predicted that the manufacturing and agri-business industries will be the greatest beneficiaries in creating regional value chains and encouraging employment. World Bank projects that the AfCFTA would allow a gigantic 30 million Africans to escape extreme poverty and increase the African continent’s revenues by 450 billion by the year 2035.

To sum up, the future of AfCFTA is not lost in obscurity, as it is known to be a fascinating one which will lead to the development of the continent, but some of the basic questions concerning production capability are yet to be answered. African nations should also manufacture other varieties that could actually make the intra-African market to be more vibrant.

BY EYUEL KIFLU

THE ETHIOPIAN HERALD TUESDAY 24 JUNE 2025

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