UNLOCKING ETHIOPIA'S TRADE AND ECONOMIC POTENTIAL THROUGH THE AFCFTA: OPPORTUNITIES, CHALLENGES, AND POLICY IMPERATIVES

Abstract

The thesis examines Ethiopia's engagement with the African Continental Free Trade Area (AfCFTA) to unlock its trade and economic potential, highlighting opportunities, challenges, and necessary policy measures. Through a review of literature, policy analysis, and empirical data, the study identifies significant opportunities such as increased market access, Sectoral growth in textiles, apparel, leather, agro-processing, and light manufacturing, and the development of regional supply chains facilitated by tariff eliminations and harmonized regulations. However, challenges like infrastructure deficits, non- tariff barriers, institutional and regulatory obstacles, and limited productive capacity hinder progress. The study suggests that Ethiopia must invest in infrastructure, enhance institutional capacities, and strategically participate in AfCFTA negotiations to ensure beneficial rules of origin and trade terms. By aligning national industrial policies with AfCFTA objectives and focusing on export diversification, Ethiopia can reduce reliance on traditional markets, boost industrial growth, and achieve sustainable economic development. Successful implementation of these measures can significantly improve living standards and integrate Ethiopia into the global trading system, demonstrating its commitment to regional economic integration and its potential to transform trade expansion into a major pillar of economic growth.