Moody's Investors Service indicated that the African Continental Free Trade Area (ACFTA) agreement, which aims to create a single market for goods & services in Africa, will support intra-regional trade and improve the continent's credit profile. Also, it expected that higher intra-regional trade could help reduce growth volatility and develop the region's local economies, which would increase demand and investment in trade-related sectors. It noted that the volume of intra-African trade remains low despite increasing from 11% of the region's total trade activity in 2008 to 15% in recent years. It indicated that manufactured goods accounted for 43% of intra-African exports between 2012 and 2016, compared to 20% of the region's exports to the rest of the world. It said that countries with larger manufacturing bases and better infrastructure, such as Côte d'Ivoire, Egypt, Ethiopia, Kenya, Morocco, Namibia, South Africa and Tunisia, would benefit the most from increased trade integration. However, it noted that Africa's underdeveloped infrastructure, non-tariff barriers and finance constraints will limit the potential benefits of the ACFTA. It added that Africa’s trade finance gap exceeds $90bn annually, and that the lack of financing limits the region’s trade potential.
Source: Moody's Investors Service
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