Addis Ababa: The African Continental Free Trade Area (AfCFTA) is set to revolutionize Africa's economic landscape by creating a unified market that supports large-scale investment and industrialization, Melaku Desta, Africa Trade Policy Centre Coordinator at the UN Economic Commission for Africa, said. The AfCFTA aims to foster intra-African trade, allowing countries to become markets for each other's products.

According to Ethiopian News Agency, the coordinator noted that the AfCFTA addresses the historical limitations of over 50 small and fragmented economies. He emphasized that many of these economies are too small to support large-scale investment and industrialization. Furthermore, the continental free trade area seeks to keep value addition within Africa by utilizing existing capacities to process raw materials locally rather than exporting them for processing elsewhere.

Melaku advocated for the creation of regional value chains within Africa. He explained that by producing raw materials and processing them within the continent, Africa could retain value and enhance its industrial capabilities. This approach would help create a market for African products within the continent, allowing countries like Ethiopia and Kenya to trade with each other and benefit mutually.

The coordinator stressed that this strategy could lead to economic independence by dismantling colonially imposed borders and establishing a significant market to attract investment. Although the short-term GDP impact might be modest, Melaku highlighted the long-term benefits of the AfCFTA as a vital step for Africa's industrialization. He projected that intra-African trade, currently around 16-17 percent, could increase to about 34 percent by 2045.

Melaku also pointed out that Africa's export trade is dominated by primary commodities, whereas intra-African trade is significantly driven by the manufacturing sector. This underscores the role of the AfCFTA as a tool for Africa's industrialization. He noted that the initiative is particularly beneficial for Africa's 16 landlocked countries, as an integrated market would reduce the impact of political boundaries, allowing for seamless cross-border trade.

Finally, Melaku envisioned a future where borders become less of a barrier, with reduced transaction costs and increased efficiency benefiting especially the landlocked countries. This vision includes a scenario where trucks can cross borders effortlessly, highlighting the transformative potential of the AfCFTA for the continent.