Prospects and Challenges for Supply Chain Trade under the Africa Continental Free Trade Area☆

A key objective of the African Continental Free Trade Area (AfCFTA) is to develop regional value chains (RVCs) to help grow and diversify the manufacturing sector, an objective taking a new urgency under the Coronavirus Disease (COVID) pandemic where the future of supply chain trade remains uncertain. Participation in global value chain (GVC) trade depends heavily on low trade costs that, in turn, depend on low tariff and non-tariff trade barriers. Currently, the average tariff on intermediates across African countries is about 10%, about twice the rate for other developing regions (AEO, 2018; Figure 3.11). In the East African Community (EAC), arguably Africa's most integrated Regional Economic Community (REC), an agreement has been reached to move from a three-band tariff structure to a four-band tariff structure. 1 The objective of this revision at the EAC level-and of the move toward free trade at the AfCFTA level-is to boost supply chain trade (regional and non-regional) value chain trade at the REC and continental levels.