Thread by @MasterLui_, What the @AfCFTA will mean for the African continent and why it's [...]

What the @AfCFTA will mean for the African continent and why it's important to pay attention to this.

[Thread with some background - Economics 101]

#AfCFTA

The top 3 economies of the world are according to IMF :

1. The USA - $20.4 Trillion GDP. (Population: 328 million)

2. China - $13.4 Trillion GDP. (Population: 1.3 billion)

3. Japan - $4.97 Trillion GDP.
(Population: 126 million)

One the reasons these countries have such powerful economies is because they've been able to build their own domestic markets and maximize their countries productivity while being able to tap into global markets. (The invisible hand)

This means these countries enjoy an ease of flowing goods and services & money flowing within their own countries, aswell having frameworks (infrastructure, logistics) and trade agreements in place to access global markets.

In these global powers with built markets, you can create a product and be able to sell it to anyone in the country which means you have a higher chance of building a successful company because you have the numbers AND the infrastructure to get goods and services to them.

As a result of this, the citizens of these countries have more disposable income to spend. They spend on goods and services within their own domains (as one country with no borders) & they get richer and richer.

Even more so, the world at large buys goods and services from them too. Making them even more richer. Think of these companies from these top economies.

Apple, Toyota, Microsoft, Facebook, Alibaba, Netflix, Tencent, TikTok, Sony etc.

Countries become global powers by creating wealth (in producing goods and services) NOT by re-distribution and then being able to distribute these goods and services across a wide spectrum. Spreading ideas basically.

Now in Africa, we have a population of 1.3 Billion people all DIVIDED amongst 55 different countries and borders. 55 different philosophies, visions, markets and currencies all pulling in different directions.

All these borders have made it almost impossible for African countries to trade amongst due to lack of business confidence. This division makes it a nightmare for air travel too.

As countries are divided it means that these small countries have had to form bilateral trade agreements with the giants mentioned above from no place of power.

Furthermore African companies & brands have struggled to really get big. Only 18% of Africa trades with itself.

This has been due to lack of infrastructure (telecoms, roads, logistics) and the issue of borders and different taxes on tariffs and air travel. (It's cheaper to send some goods from Africa via Europe to other African countries by ship than directly by road)

Now the @AfCFTA is the new trade agreement that has been developed for some years that has come into play in Jan 2021.

It seeks to combine Africas 1.3 billion people into one multi-Trillion dollar market that will be able to trade within itself and become a super power.

This plan which 54 countries are a part of will over time turn Africa into what the top economies have - A single market to tap into. This is massive because it will allow for the first time a cross pollination of ideas.

Free Africa travel of people, goods and services.

The AU passports have already started rolling out as of last year and will continue to do so. But the overall plan if implemented correctly will be able to:

1. Create a single market.
2. Boost FDI
3. Value adds for commodities
4. Increase wealth
5. Trade as one unit

6. Aid in the free movement of people and capital.
7. Encourage industrial development
8. Enhance competitiveness
9. Grow African companies and brands.

The main idea is that if you have a product or service made in South Africa, you no longer only will have to access the South African market, you'll be able to trade with anyone from anywhere in the continent and vice versa.

These are the core opportunity areas. But there are a whole lot more.

This the basics for ease of understanding. I will be adding more information and also my own podcast and all.

I'm excited because this has been something on my mind for years with my background being in Economics. This is exciting, just has to be implemented right.

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