Phase 1 regional growth
Working paper

The implications of the African Continental Free Trade Area on South African agricultural trade: An application of the partial equilibrium model

Thembalethu Seti
July 2021

The paper adopts the SMART partial equilibrium model to simulate the impact of a full tariff liberalization as proposed under the African Continental Free Trade Area on South African agriculture. The results of the model reveal that South Africa will gain a total trade value of about US$199 million, and the total trade diversion from third parties will stand at US$42 million. South African agricultural commodities with the greatest export potential to the African market include sugar cane, maize, citrus fruit, cigarettes, and sauces. Products that are vulnerable to the free trade area include groats cereal, cotton, vegetable, flowers, dairy produce, and poultry. The full tariff liberalization is projected to decrease the South African export revenue by 7 per cent. The study recommends that South Africa protect infant industries from increased imports to hamper job losses and diversify its tax base to tamper with the losses in tariff revenue.