The African Continental Free Trade Agreement (AfCFTA) could have a significantly beneficial effect on trade for the region, particularly in the maritime arena.
This is according to the United Nations Conference on Trade and Development's (UNCTAD) Review of Maritime Transport 2021, which said it could reduce its trade deficit alone by as much as 51 per cent.
First announced in 2019, the AfCFTA agreement gathers 54 out of 55 African nations with the aim of phasing out all tariffs on commerce and eliminating customs duties on 97 per cent of products within 15 years.
It was supposed to take effect on July 1st 2020, but was delayed by the complications associated with the coronavirus pandemic. However, with World Bank research estimating the deal would lift 30 million Africans out of extreme poverty by 2035, work began as soon as possible to get it back off the ground, and it was finally implemented in January 2021.
This new report from UNCTAD suggests the deal could have the power to lift intra-African trade by a third, although it stressed the need to develop better maritime infrastructure in particular if the benefits are to be fully realized.
"The AfCFTA is expected to increase demand for different modes of transport, including maritime transport," it added.
Should the necessary infrastructure projects be completed, UNCTAD estimates Africa's sea-based fleet could increase by 188 per cent for bulk and 180 per cent for container cargoes.
Much of this demand could come from countries like China seeking new suppliers for metals, with Africa having much to offer in terms of iron ore and bauxite in particular.
However, the report did warn that the continent faces other significant challenges going forward that must be addressed, such as connectivity issues, long port call times and the ongoing effects of disruption caused by COVID-19.
It comes after the 'Exploring the African Continental Free Trade Area and the Resilient Economic Recovery' event held virtually by the Overseas Development Institute also discussed how the AfCFTA is likely to bring significant economic benefits to the continent.