The Africa CEO Trade Survey Report 2023, an initiative by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC), reveals that more than 80% of African senior executives are optimistic about the impact of the African Continental Free Trade Area (AfCFTA) on their businesses.
The report, now in its third edition, is based on a survey of over 1,000 senior executives from across Africa. It provides insights into the continent’s private sector’s views on trade, Africa’s economic outlook, and the impact of the AfCFTA.
Strong Optimism for AfCFTA
A majority of respondents (56%) expect the AfCFTA to have a very positive effect on their businesses, while 24% believe it will have a moderately positive effect. Only 1% anticipate a negative impact. The respondents, primarily representing small and medium-sized enterprises (SMEs), were located in 48 countries, 44 of which were in Africa.
“The 2023 PAFTRAC survey shows that a majority of respondents are optimistic about the free trade area’s positive impact on their businesses,” said Prof. Patrick Utomi, Chairperson of PAFTRAC. “This optimism stems from the AfCFTA’s commitment to easing market access and fostering trade and economic growth.”
Information Gap Hinders AfCFTA Awareness
Despite the positive outlook, the survey also highlights a significant information gap regarding the AfCFTA. Around 72.9% of respondents have a low to moderate level of awareness of the free trade area, with limited access to information about it. Nearly half (49%) have not heard of the Pan-African Payment and Settlements System (PAPSS), a key operational instrument for intra-African trade, and a similar number are unaware of the AfCFTA’s efforts to reduce non-tariff barriers.
SMEs Seek Information, Credit, and Improved Trading Environment
The survey identifies information as the most critical form of support companies need to capitalize on the AfCFTA’s opportunities. Greater access to credit and an improved trading landscape through training, investments, and trade-friendly regulations are also seen as beneficial but fall short of addressing the information deficit.
“Access to information, credit, and improving the trading landscape are crucial for SMEs to take advantage of the AfCFTA,” emphasized Prof. Utomi.
Tariff and Non-Tariff Barriers: Perceived Threats and Opportunities
Increased market size, potential for new investments, and better access to raw materials are identified as the main perceived benefits of the AfCFTA. However, the erosion of both tariff and non-tariff barriers is also seen as a potential threat due to the increased competition it could bring, as cited by 27% of respondents.
Economic Outlook: Cautious Optimism
Despite economic headwinds such as high inflation, debt levels, and interest rates, 80.1% of survey participants expressed confidence in Africa’s economic outlook for 2023, with 14.2% describing themselves as very confident. These figures align with last year’s results, suggesting overall optimism about the continent’s economic prospects.
The road to successfully implementing the AfCFTA remains long, but through public-private sector collaboration, a successful, Africa-wide free trade area can become a reality. Addressing the information gap and providing SMEs with the necessary support will be crucial in realizing the full potential of the free trade area and driving Africa’s economic growth and development.