Understanding the Agreement for African Continental Free Trade Area: Considerations for Korean Firms

The report examines the AfCFTA's potential to create a single market of 1.2 billion people and $2 trillion GDP, highlighting its goals to boost intra-African trade and harmonise trade governance. It details key investor considerations, including the continued relevance of Regional Economic Communities (RECs), tariff phase-down schedules, and the impact of non-tariff barriers and rules of origin. The document specifically analyses the Republic of Korea's trade and investment profile in Africa, noting a heavy reliance on natural resource imports and a relatively low FDI stock compared to other global powers. It suggests that Korean firms can find opportunities in manufacturing, digital transformation, and the use of Special Economic Zones (SEZs) to enter the continent. Finally, it recommends that Korea enhance its 'aid for trade' initiatives, focusing on infrastructure project preparation and support for African SMEs to foster mutually beneficial relations.

• The AfCFTA aims to create a single market across 54 sovereign nations with a combined GDP exceeding $2 trillion and a consumer base of 1.2 billion people.
• Full implementation of the AfCFTA is projected to result in welfare gains of $16.1 billion, GDP growth of 1-3%, and a 33% increase in intra-African trade.
• The agreement prioritizes the 'preservation of the acquis', meaning that existing higher levels of regional integration within RECs will take precedence over AfCFTA rules.
• Tariff liberalisation is structured by country classification: non-Least Developed Countries (LDCs) will fully liberalise non-sensitive products over 5 years, while LDCs and the 'Group of Six' (Ethiopia, Madagascar, Malawi, Sudan, Zambia, and Zimbabwe) have longer timelines of 10 to 15 years.
• Non-tariff measures (NTMs), particularly Technical Barriers to Trade (TBTs), represent a more significant cost to the private sector than tariffs; TBTs accounted for 78.2% of the nearly 4,000 NTMs reported to the WTO in 2018.
• Strict Rules of Origin (RoO) may act as a barrier to foreign firms, potentially negating tariff concessions if the administrative burden of proving domestic value-addition is too high.
• South Korea's trade with Africa is heavily skewed toward natural resources, with mineral fuels accounting for 61% of imports in 2018, while its exports are dominated by manufactured goods like vehicles (19.7%), ships (14%), and machinery (12.3%).
• South Korea's FDI in Africa is significantly lower than that of other major powers, totaling less than $0.2 billion in 2018, with investments concentrated in manufacturing (52.9%) and mining and quarrying (39.2%).
• Korean Official Development Assistance (ODA) to Africa increased from $24 million in 2000 to $408 million in 2017, primarily targeting education, transport, and communications.
• Special Economic Zones (SEZs) are identified as optimal entry points for foreign investors to leverage the AfCFTA, as seen by the Jushi Fibreglass Manufacturing case in Egypt's Suez Canal Economic Zone.
• Korean firms are underperforming relative to their global export share in several African market categories, including electrical machinery, iron and steel, and optical/medical instruments.

APA

South African Institute of International Affairs (n.d.). Understanding the Agreement for African Continental Free Trade Area: Considerations for Korean Firms. https://saiia.org.za/wp-content/uploads/2020/02/Understanding-the-AfCFTA_special-report_February2020.pdf

Chicago

South African Institute of International Affairs. Understanding the Agreement for African Continental Free Trade Area: Considerations for Korean Firms. n.d. https://saiia.org.za/wp-content/uploads/2020/02/Understanding-the-AfCFTA_special-report_February2020.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Understanding the Agreement for African Continental Free Trade Area: Considerations for Korean Firms |url=https://saiia.org.za/wp-content/uploads/2020/02/Understanding-the-AfCFTA_special-report_February2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndunderstanding, author = {{South African Institute of International Affairs}}, title = {{Understanding the Agreement for African Continental Free Trade Area: Considerations for Korean Firms}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2020/02/Understanding-the-AfCFTA_special-report_February2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }