The AfCFTA is an important step towards rationalizing Africa’s regional trade arrangements to deepen economic integration and draw on economies of scale and development of regional value chains to accelerate the process of structural transformation and diversification of African economies.

While it is widely accepted that gains from trade integration are overwhelming, it is also recognized that trade liberalization has distributional consequences and gains and losses are spread unevenly among countries and within countries either by increasing short-term adjustments costs- the costs related to resources shifting from one sector to another occurring in the period immediately after liberalization incurred by shrinking sectors or by making some people worse-off in absolute terms.

The main objective of the adjustment facility is to enable eligible countries to manage the adverse effects of revenue losses and assist in the creation and/or retention of private sector jobs and stimulate investments to support trade and economic growth during the adjustment period following liberalization. The AfCFTA Adjustment Facility is consistent with the Bank’s strategy of promoting intra-African trade and economic integration and supporting industrialization and export diversification.

The objective of the Consultancy was to develop draft statutes and resource mobilization plan and initiative for the proposed AfCFTA Adjustment Facility for consideration by AU policy organs, including African Ministers on Trade and Finance and the AU Summit. The Statutes will serve as the legal instruments for the establishment of the Adjustment Facility and the resource mobilization strategy will be used for mobilizing resources for the Adjustment Facility.

Imani Development was contracted to provide the following services to support development of the AfCFTA Adjustment Facility:

  • Develop guidelines on how the facility would allocate resources, this should include generic eligibility criteria as well as specific criteria that applies to specific type of funding available under the facility (debt, grants and other sources of funding). This should include the size and mix of funding on a country- by country basis. The consultants should also go granular in identifying the public (including fiscal needs) and private sector needs for each country through a scientific method (for example, may want to use the statistics of private sector investments as a proxy for the private sector penetration in African countries);
  • Develop a strategy for capacity building and technical assistance that may accompany allocated funds to maximize their effectiveness and/or support implementation of the terms of the AfCFTA.
  • Provide experts advice to support the drafting of statutes and resource mobilization, as needed