So far, all the studies conducted on the African Continental Free Trade (AfCFTA) concur on the fact that the implementation of this agreement will deliver significant economic advantages to Africa, some forecasts suggesting that the African economy will grow of nearly 10% within 2043. However, much will depend on the level of preparedness of the AfCFTA State Parties to put in place appropriate AfCFTA implementation measures that support the development of economic and industrial sectors that are key for their economies, and on their ability to mitigate potential risks that this implementation involves. To this end, a complete toolkit has been developed within the Accelerated Industrial Development for Africa (AIDA) initiative to support African States in these efforts.
AIDA is a framework initiated by the African Union to promote industrial growth and economic diversification across the continent. Inaugurated in January 2008 through a collaborative effort by the AU Commission, UNIDO (United Nation Industrial Development Organization), UNECA (United Nation Economic Commission for Africa), and other development partners, it aims at accelerating industrialization in four priority sectors where Africa is deemed to have a high growth potential: 1) agro-processing, 2) mining, 3) pharmaceuticals, and 4) textiles. To this end, the AIDA plan identifies seven key clusters where a series of initiatives are planned with the aim of enhancing the manufacturing sector, creating job opportunities, and reducing dependence on primary commodities by fostering value addition and sustainable industrialization.
To support these objectives, a “Guide for Country Impact Assessments on AIDA and the AfCFTA” has been developed, which describes three tools that African policymakers can use to evaluate the impact of the AfCFTA on their national economies in various dimensions, including the economic, social, and environmental ones, with examples on how to use them and the kind of data sources to be used to feed those models.
These tools are the following:
1) The AfCFTA Potential Impact Assessment: it helps countries to estimate the economic impact of the AfCFTA on specific products (including their export potential) or to assess the implications of increased imports of certain products on consumer prices, domestic producers, trade diversion, and tariffs. Additionally, it identifies the social and environmental impacts and risks of the AfCFTA. The methodologies recommended to conduct this assessment are three : the Computable General Equilibrium (CGE) modelling, Partial Equilibrium (PE) modelling, and the Hybrid modelling (which combines elements of the previous two methodologies).
2) The AfCFTA Enabling Environment Monitoring Tool: Provides a Monitoring and Evaluation (M&E) logical framework to track progress towards achieving the AfCFTA’s Impact Goals such as increased intra-African trade across three key enabling factors: 1) Trade Facilitation, 2) Trade Infrastructure Development and 3) Trade Finance.
3) The Industrialisation Progress Assessment tool: this is a survey template that can be used to assess industrial progress at continental, regional, and national levels. It helps governments and stakeholders evaluate levels of awareness and support for industrial initiatives including AIDA. In addition, it helps to assess sector-specific performance across seven enablers of industrialisation, such as access to raw materials and equipment, Infrastructure and energy development, finance and resource mobilisation, regulatory frameworks, human capital development, innovation, R&D and technology, and governance and economic stability.
This guide is a pragmatic tool that can provide actionable insights to policymakers, trade experts and other specialists in development policies, to shape the policy reforms needed for efficiently implementing the AfCFTA. . The three tools should be used in combination with each other. For instance, findings from the guide could indicate that a particular industrial sector has a potential fortrade or export growth under the AfCFTA (based on the AfCFTA Potential Impact Assessment), but that this potential needs some preconditions in order to be unlocked (for instance, infrastructure improvements based on findings in the Industrialisation Progress Assessment).
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