Thank you very much, Chair Karen Bass, Ranking Fellow Christopher Smith, and Distinguished Members of the Subcommittee, for your extraordinary leadership in U.S.-Africa relations. I am incredibly honored and grateful for the opportunity given to me by the members of this committee to testify on “Understanding the African Continental Free Trade Area and how the United States can promote its success”. I am Landry Signé, Managing Director and Professor at the Thunderbird School of Global Management, Senior Fellow at the Brookings Institution’s Africa Growth Initiative, Distinguished Fellow at the Center for African Studies at Stanford University, and a member of the Regional Action Group on Africa from the World Economic Forum. , and the World Economic Forum’s Global Future Council on Agile Governance.
The African Continental Free Trade Area (AfCFTA) was signed in March 2018, ratified by the required number of countries in May 2019 and entered into force in January 2021.
The importance of the AfCFTA cannot be overstated. It is the largest new free trade area in the world since the creation of the World Trade Organization (WTO) in 1994. It promises to increase intra-African trade through deeper levels of liberalization trade and enhanced regulatory harmonization and coordination. Furthermore, it is expected to improve the competitiveness of African industry and enterprises through improved access to markets, exploitation of economies of scale and more efficient allocation of resources.
My research has shown that the AfCFTA – and the increased market access that accompanies it – can dramatically increase manufacturing and industrial development, tourism, intra-African cooperation, economic transformation and Africa-to-Africa relations. and the rest of the world. In fact, under a successfully implemented CFTA, Africa will have combined consumer and business expenditure of $6.7 trillion by 2030 and $16.12 trillion in by 2050, creating a unique opportunity for people and businesses – and meaning the region can be the next big market for Americans. goods and services.
The ECA has predicted that by 2040, the implementation of the AfCFTA will increase intra-African trade by 15-25%, or $50-70 billion. The World Bank estimates that the AfCFTA will lift 30 million people out of extreme poverty and significantly increase the incomes of 68 million people who are barely above the poverty line. The International Monetary Fund (IMF) also predicts that, under the AfCFTA, Africa’s expanded and more efficient goods and labor markets will significantly raise the continent’s overall ranking on the Global Competitiveness Index.
While there is great momentum behind the deal, its successful implementation depends on smart choices and thoughtful policy options. The United States can and should play an extraordinary role in promoting the success of the AfCFTA to increase intracontinental and global trade, as well as to achieve mutual prosperity for Africa and the United States.
In this testimony, I will first briefly examine some trade challenges in Africa and their implications for the development of the continent. Second, I will explain why the AfCFTA can be a solution to these challenges. Finally, I will discuss how smart U.S. foreign policy and assistance (both financial and technical) can support its success in increasing intracontinental and global trade.
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