“Once the 55 AU member countries join AfCFTA, it will become the largest free trade area and customs union in the world, and many other African products and services will be freely available in other African Union countries,” Subban adds. The IMF also considers ACFTA to be a potential “Game Changer”, as intra-African trade accounts for only 18% of Africa`s total trade. Domestic trade is 69% in Europe and 59% in North and South America. The UN Economic Commission for Africa estimates that the implementation of ACFTA could double intra-African trade by 2030. There is clearly a swing and roundabout scenario. While tax authorities will see the shortfall in the reduction in trade tariffs, it is likely that the benefits will outweigh the costs. Increased trade, diversification of production, job creation and greater industrialization will lead to new sources of corporate taxes, VAT and increased tax revenues. “AfCFTA predicts that South Africa will also benefit from increased foreign direct investment, greater access to expertise and the opportunity to reduce public spending. This is because their implementation could eliminate subsidies to local industrial segments because of the positive results of the agreement.
However, two drawbacks of the agreement are the possible increase in the outsourcing of employment due to the significant reduction in tariffs and the possible deterioration of natural resources,” explains Mr. Mukhovha. Beyond the commitment and political determination of African heads of state, AfCFTA`s greatest organizational challenge lies in the ownership and participation of the African population. Critical buy-ins that will generate local ownership and sustainability depend on the active participation of the private sector, the banking sector and local manufacturing, small and medium-sized cross-border traders, science, civil society groups, women`s organized groups, cooperatives and the media in and between countries. However, two of Africa`s largest economies, Nigeria and South Africa, have not signed the agreement in Kigali in 2018. The two countries had expressed support for the agreement before the summit, but the reasons for their reluctance were in two different ways,” Mukhovka said. This is not a new story, because China clearly has the financial means to seize the world. The question is who else is in this race? What about the United States? Well, South Africa is the largest U.S. trade PARTNER in Africa, with a total of $14 billion in 2018. Overall, however, trade figures have declined. South Africa`s trade with the United States was $11.97 billion in the first 11 months of 2019, according to a WorldCity analysis of the latest U.S. analysis.