Africa’s Trade Revolution Needs Peace
Rebalancing Africa’s security and development objectives is a daunting task. But it is one that political leaders must seize with both hands in order to realize the enormous potential of the African Continental Free Trade Area.
CAIRO – The African Continental Free Trade Area (AfCFTA), which came into effect in January, could be a game changer in helping to lift the continent out of poverty and onto the path of long-term prosperity. The AfCFTA has the potential to accelerate and alter the composition of foreign direct investment in Africa, thereby diversifying the continent’s sources of growth and boosting its internal and external trade. And merging Africa’s relatively small markets into one of the world’s largest will enable investors to capitalize on greater economies of scale.
But Africa risks squandering this huge opportunity unless its leaders can address the continent’s unwelcome reputation as one of the world’s most conflict-prone regions. According to the World Bank, nine African countries currently suffer from high institutional and social fragility; 12 are engaged in medium or high-intensity conflicts. Unsurprisingly, the number of conflict-related deaths in the region has surged from 2,200 in 2010 to an average of 14,000 per year since 2014. Transnational terrorist networks have recently intensified the problem.
Besides causing untimely deaths and suffering, and destroying infrastructure, conflicts impede economic activity and undermine formal and informal cross-border trade. Informal trade between Mali and Algeria, for example, has fallen by more than 64% since 2011, largely owing to the conflict in northern Mali and the closure of the two countries’ border.