The Future's Report

Abstract

Market openings significantly boost trade and economic growth, but the AfCFTA’s unique contribution is to the economic transformation of Africa – a much needed factor to create higher quality trade. Without structural change, the continent is less likely to address the persistent challenge of poverty, unemployment and the economic marginalization of women and youth. The ability for the AfCFTA to drive this transformation in Africa is partly dependent on the successful transition from current inward-looking approaches to trade and investment towards the strengthening of RVCs where different segments of the industry VCs are located across the region reflecting local comparative advantage. RVCs enable countries to combine their comparative and competitive advantages to participate in industries from which they would likely be excluded if they relied only on their own capability sets. RVCs enable the emergence of specialized agglomerations which are essential for effective participation in higher value sectors with rapidly changing technologies and attendant skill sets, and they facilitate the development of economies of scale.