Standard Bank Group
Sign in
Standard Bank Group
2_News_overview-14formats
Standard Bank Insights 16 Apr 2021

Africa’s free-trade bloc could significantly boost UK-Africa trade and investment flows

By Sola David-Borha, Chief Executive for Africa Regions at Standard Bank Group

AfCFTA came into effect on 1 January – a significant milestone in the journey towards creating a single market for goods and services. With the African Continental Free-trade Area (AfCFTA) now operational, there are new opportunities for the UK and Africa to strengthen their trade and investment ties.

AfCFTA came into effect on 1 January – a significant milestone in the journey towards creating a single market for goods and services. With a combined GDP of $3.3 trillion and a market of 1.2 billion people, AfCFTA has the potential to increase growth in Africa by $450 billion over the next decade, according to the World Bank’s estimates. By removing tariffs, reducing trade barriers, and standardising regulatory frameworks, intra-African trade could rise from 15% currently to 25% by 2040, according to the UN Economic Commission for Africa (UNECA). 

The benefits of intra-regional trade are well known, and some examples already exist on the continent. Trademark East Africa, an initiative supported by the UK government that is aimed at driving trade across the East African community, has been effective in increasing trade flows and reducing trade costs by up to 10%. This initiative should be scaled to other regions in Africa to supplement AfCFTA and accelerate its rollout. 

Although the initial benefits will stem from increased intra-African trade, we believe that AfCFTA also provides a huge opportunity to boost the UK-Africa trade corridor. It will also stimulate significant investments into the continent, particularly in sectors such as technology, manufacturing and infrastructure.