February 9, 2024
South Africa commences preferential trade under the African Continental Free Trade Agreement
President Cyril Ramaphosa and the Minister of Trade, Industry and Competition, Ebrahim Patel announced the launch of preferential trade under the African Continental Free Trade Agreement (AfCFTA), which commenced in South Africa on 31 January 2024.
This paves the way for South African companies to export duty free, or with reduced duties, to 12 African countries.1 It may also encourage multinational companies to invest and manufacture in South Africa. More countries are expected to implement the agreement in 2024 and it is hoped that within the next few years all 55 member states of the African Union will be operating under AfCFTA.
AfCFTA was originally slated to launch in 2020 but was delayed for various reasons, including COVID-19 lockdowns. Initially the agreement only applies to physical goods including manufactured goods -
such as farming equipment and processed foods — but is expected to expand to the services economy, tourism, e-commerce and logistics.
The actual benefits of AfCFTA for any particular industry will depend on various factors, including the effective implementation of the agreement, investment in infrastructure and skills development, and the ability of South African businesses and government to adapt to new opportunities.
Multinational companies that produce or sell products that originate in South Africa may also have free trade access to participating countries across the continent.
The potential for growth and increased competitiveness across various sectors is undeniable, making AfCFTA a significant development for South Africa's economy.