What the AfCFTA might mean for Executive Search
On January 1st this year, amidst the unprecedented impact of COVID19 on the global economy, trading under the Africa Continental Trade Area Agreement (AfCFTA) began, and we are both proud and excited for the opportunities this represents for Kenya, as a member state.
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Founded in 2018, the core purpose of the agreement is the elimination or reduction of tariff and non-tariff barriers (NTBs) amongst the 54 Countries that currently make up the bloc, by providing a single market for goods and services in order to deepen the economic integration and prosperity of the African Continent. The reduction of red tape and simplification of customs procedures has been quoted by the World Bank as being a key driver of $292billion of the $450 billion in potential income gains!
As published by the African Union, “The AfCFTA will be one of the largest free trade areas since the formation of the World Trade Organization (WTO), given Africa’s population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050.
The AfCFTA aims to integrate the entire region into a unified market that could embody a combined GDP of $2.5tn and a population of over 1 billion, 60 per cent of whom are below the age of 25.
Alongside the expected macroeconomic benefits, including increased trade among African countries and stimulation of production through the development of regional value chains we are hopeful about the potential benefits to the labour market and as a result Executive Search, that could come out of AfCFTA including;
- African Female Empowerment: Women make up over two-thirds of informal cross border traders. They face high levies, delays and corruption as they cross borders, and free movement under AfCFTA could reduce these obstacles. This will enable growth and encourage increased productivity of women-led businesses and would lead to an increase in the scale and competitiveness of these vital businesses as well as the potential diversification of the sectors they typically represent.
- Increase in Competitiveness of African Businesses: Having access to a larger market represents an opportunity for African organisations to increase their production, or move that production to a more competitive location driving economies of scale and associated growth opportunities.
- Increased Employment Rates: As businesses grow, so too does the need for larger workforces, leading to improvements in employment levels, helping to lift populations out of poverty and extreme poverty.
- Skills Development: Training programmes and skills development initiatives will be vital in ensuring the population are well placed to take advantage of the opportunities made available through the initiative.
- Increased foreign investment: The investment incentive for foreign investors to buy stakeholdings in African Enterprises, given the increase in market size and greater policy certainty that the AfCFTA should bring, will no doubt bring great opportunity and expansion of quality investment that will deliver the sustainable development needs of the continent.
At Millar Cameron, our hope is that the success of AfCFTA will accelerate Kenya’s position as a leading player in the global market as well as drive development changes that will positively impact the people of Kenya and deliver the opportunities they deserve.
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