We’ve in place an adjustment facility to cushion countries that may encounter tax & revenue issues- AfCFTA
Ms. Demitta Gyang, Senior Advisor in Charge of Customs and Trade Facilitation at the African Continental Free Trade Area (AfCFTA) Secretariat, has stated that while full implementation of the African Continental Free Trade Agreement (AfCTA) will have a negative impact on Customs Revenue, it will be in the short term.
She stated that, in light of this, the AfCTFA has established an adjustment facility to assist countries that may encounter tax and revenue issues during the implementation of the agreement.
”Thirdly, looking at the agreement, you must remember the net welfare gain estimated at 16 billion, 450 billion growth in GDP, 30 million lifted out of extreme poverty and 70 million lifted out of poverty if the agreement is fully implemented,” she argued.
So, when you examine the theme through the lens of tax revenue that would be lost in the short term and weighed against the gains that would result from the AfCFTA, you will see that the long-term gains will outweigh the short-term losses.
Increased trade means increased production because we have to produce what we trade, and if you produce what you trade and use what you produce, the increased welfare of the African populace will add value to the economy.
Due to some revenue losses projected in the short term, the 7th Annual Congress is focusing on the Tax and Revenue Implications of the African Continental Free Trade Agreement.
With the implementation of the AfCFTA, it is expected that Africa’s aggregate tariff revenues will decrease, with some countries being more affected than others.
She made the remarks while speaking at the opening of the 7th Annual Congress on Monday, September 5, 2022, in Accra on behalf of Secretary-General H. E. Wamkele Mene.
She stated that the AfCTFA is the largest market trade area, with a population of 3 billion people, 54 member states who have signed, and only one country left to sign.
She also revealed that 43 countries have ratified the treaty, with a few more on the way.
According to her, it is the AU’s fastest-ratified instrument since its inception.
The instruments for implementation she announced are ready, and by ready, she meant that when the agreement was negotiated, the level of ambition for the agreement was 97%, and by 97%, you would have these tariffs at zero by 2033.
As part of its mandate, the AfCFTA is to eliminate trade barriers and boost intra-Africa trade.
In particular, it is to advance trade in value-added production across all service sectors of the African Economy.
The AfCFTA will contribute to establishing regional value chains in Africa, enabling investment and job creation.
The practical implementation of the AfCFTA has the potential to foster industrialisation, job creation, and investment, thus enhancing the competitiveness of Africa in the medium to long term.