Promoting investment to power Africa’s single market
The landmark African Continental Free Trade Area (AfCFTA) aims to increase Africans’ prosperity through more intra-African trade by eliminating tariff and non-tariff barriers. There is however the question of the production of the goods and services that will be traded.
Scaling up production will require an injection of local and foreign investment into African industries. The increased focus on investment is a logical next step in the AfCFTA’s implementation process.
In February, a draft protocol on AfCFTA investment was submitted to the African Union heads of state summit. The protocol is part of the second phase of the free trade area negotiations. It aims to facilitate and protect intra-African investment and improve the attractiveness of the single market to foreign direct investment.
Among other things, the draft protocol provides for a Pan-African Investment Agency to help coordinate investment promotion by AfCFTA member states. To ensure its success, lessons from previous attempts must be examined.
Linked to the goal of scaling up African industries is a recognition of the role of regional value chains in a free trade area. The AfCFTA Secretariat has identified some key value chains to prioritise for their export potential. These include automotives, textiles and apparel, pharmaceuticals, and cocoa, among others.
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