While there is a general optimism around the promise of the newly in-force African Continental Free Trade Agreement (AfCFTA), like any other free trade agreement (FTA), it will inevitably create winners and losers. This unequal distributional impact is a function of many possible factors, including manufacturing capacity, domestic costs of doing business, firm productivity, infrastructural capability, AfCFTA awareness levels, and access to loans and financing. Whether due to firm-level inefficiencies, information frictions, or the suboptimal business environments, some firms—or even sectors—within a country may be unable to expand market opportunities as competition from other continental economies rises. The AfCFTA drops 90 percent of tariffs and includes policies aimed at eliminating nontariff barriers, such as customs delays, so the aggregate long-term benefits of AfCFTA are likely to be substantial and larger than potential losses; however, some countries and sectors will likely be impacted negatively in the short term.
Quantifying the impact on Nigeria of the African Continental Free Trade Area (brookings.edu)
