‘AfCFTA needs $411b for transport infrastructure’

Deputy Executive Secretary, Economic Commission for Africa (ECA), Antonio Pedro, has said that the African Continental Free Trade Area (AfCFTA), a key project of the African Union’s Agenda 2063, requires an estimated $411 billion for transportation infrastructure to support efficient intra-continental trade.

Speaking at this year’s conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa recently, he said the AfCFTA serves both as a development blueprint and a powerful political platform and a prosperous Africa presents a significant market for businesses worldwide.

Further at the conference, themed: “Advancing the implementation of the Agreement Establishing the African Continental Free Trade Area: proposing transformative strategic actions;” Pedro acknowledged that Africa must first overcome the limitations of the small and fragmented economies inherited from colonial rule to unlock its full economic potential. He described AfCFTA as the result of over six decades of persistent efforts toward regional and continental economic integration.

“Today, about 85 per cent of Africa’s total exports is directed to the rest of the world, with a strong concentration in primary commodities that account for over 60 per cent of the total. This contrasts with the composition of intra-African trade, which, although relatively small, is more diversified and dominated by industrial products. This is where the AfCFTA is expected to be a game changer.”

He said their latest empirical assessment indicates that reducing tariffs and non-tariff barriers within the continent, as outlined in AfCFTA’s modalities, could result in intra-African trade growing by 45 per cent by 2045. The majority of these anticipated gains are expected in the agrifood and industrial sectors, creating unprecedented opportunities for Africa’s industrialisation, food security and product complementarities. He went on to project that AfCFTA’s implementation would require about $411 billion in transport equipment.

“Another important study we did in 2022 on ‘Implications of the African Continental Free Trade Area for Demand of Transport Infrastructure and Services,’ projected that about $411 billion in transport equipment will be required because of AfCFTA, including $4 billion for 135 vessels, $25 billion for 243 aircrafts, $36 billion for 169,000 rail wagons and $345 billion for over 2.2 million trucks,” he said.

Investments in railway infrastructure and fleets are expected to increase intra-African trade by rail from less than one per cent today to nearly seven per cent, representing a projected rise of 5.5 per cent, he added.

Despite the vast potential, he noted that a lack of appropriate information about AfCFTA remains a major challenge. He noted that achieving the benefits of intra-African trade requires greater awareness and engagement from the private sector.