The creation of the African Continental Free Trade Area (AfCFTA) will increase total African exports by almost 18 percent and the total real GDP of the African continent by 1 percent. The establishment of an African customs union would increase their exports by 25 percent. As a result, total real GDP of Africa would increase by 2 percent. However, adding a monetary union with a single currency on top would increase exports from the African countries only by another 1 percent and the total African real gross domestic product only by another 0.1 percent. These are the results of a trade gravity and general equilibrium simulation by Yuri Kofner, junior economist, MIWI – Institute for Market Integration and Economic Policy.
On average, the AfCFTA will make every African citizen USD 53 richer (in terms of GDP per capita in constant USD). The creation of a customs union will double this amount to an increase of USD 100 per capita. Introducing a monetary union would only add another USD 3 per person on top.
Using the results of econometric estimations by the Kiel Institute for the World Economy (2019) and migration stock data by the World Bank, the economist was furthermore able to estimate that the additional economic growth induced by the African Continental Free Trade Area could. ceteris paribus, reduce migratory pressure from Africa to the EU by 1.1 percent (ca. 86,000 people), to Germany even by 6.3 percent (26,000 people). The creation of an African customs union could reduce emigration from Africa to the EU by 2.2 percent (168,000 people) and to Germany by 7.1 percent (29,000 people).
Author : Kofner