African Reserves

Free trade agreement with Africa highlights currency disparities


Photo: iStock

Photo: iStock

As of the start of this year, countries whose parliaments have ratified the African Continental Free Trade Area (AfCFTA) agreement and have tabled a tariff list under which 90% of goods and services are traded freely have been allowed to trade under the rules of the agreement. .

According to the World Bank, if fully implemented, the AfCFTA would increase Africa’s revenues by $ 450 billion by 2035, while adding $ 76 billion to the revenues of the rest of the world.

[It] reduce reliance on the dollar by allowing payments between countries in local currencies

Alex Kuptsikevitch, FxPro

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But as anyone who has followed the fallout from the UK’s exit from the European Union knows, there is rarely a consensus on the value of free trade agreements. In addition, a study published by law firm Baker McKenzie and economic forecasting specialist Oxford Economics recognized that the deal would open up “uneven” growth opportunities on the African continent.

The Brookings Institution posted a blog earlier this year by two World Bank economists who described the mix of exchange rate regimes in sub-regional markets as a barrier to free trade in much of Africa. , resulting in significant misalignments and disparities in growth.

Their


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