Our response to the pandemic has changed political and social systems and created new social norms. Now the world continues to face a plethora of challenges – including climate change, inequality, technological change, migration and displacement – that are both complex and evolving, and which demand collective action. Most pressingly, the full economic impact of the pandemic is still not fully understood: The IMF projected a historic global GDP contraction of 4.4% in 2020 and a partial and uneven recovery in 2021, with growth at 5.2%.
And yet, despite these challenges, global leadership and cooperation have been woefully lacking since the beginning of the COVID-19 crisis. During this time, our rules-based international order became more fragile and even “disordered”. We saw a rise of populism, protectionism and nationalism, exacerbated by COVID-19. Citizens’ trust in governments across the world has been eroded, creating fragility in once-stable democracies. Events in the US Capitol last month simply highlight the fragility of the previously thought-to-be-most-stable of democracies.
Enter the African Continental Free Trade Area (AfCFTA).
Launched on 1 January, the AfCFTA is an exciting game changer. Currently, Africa accounts for just 2% of global trade. And only 17% of African exports are intra-continental, compared with 59% for Asia and 68% for Europe. The potential for transformation across Africa is therefore significant. The pact will create the largest free trade area in the world measured by the number of countries participating. Connecting 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion, the pact comes at a time when much of the world is turning away from cooperation and free trade.
The agreement aims to reduce all trade costs and enable Africa to integrate further into global supply chains – it will eliminate 90% of tariffs, focus on outstanding non-tariff barriers, and create a single market with free movement of goods and services. Cutting red tape and simplifying customs procedures will bring significant income gains. Beyond trade, the pact also addresses the movement of persons and labour, competition, investment and intellectual property.