The Role of AfCFTA in Enhancing Capital Accumulation through Vegetables and Fruits Trade: A Case of Tanzania

Abstract

Tanzania's ratification of the African Continental Free Trade Area (AfCFTA) presents an opportunity to enhance regional trade and stimulate capital accumulation in the fruits and vegetables sectors. This paper is based on a study that explored how trade liberalization driven by AfCFTA can promote capital accumulation through increased net exports, the reinvestment of trade surpluses, and improved financial linkages. Using the Dynamic Equilibrium Model for Economic Development, Resources, and Agriculture (DEMETRA)—a single-country computable general equilibrium (CGE) model—and the Modular Applied General Equilibrium Tool (MAGNET), a global multiregional CGE model, the study simulated two trade liberalization scenarios: (i) tariff-only reductions and (ii) reductions combining both tariff and non-tariff measures (NTMs). These scenarios were evaluated across four trade schedules: Revenue from Tariff (REV), which focused on optimizing government revenue; Agricultural Trade (AGR), which prioritized food security and market access; Intermediate Inputs Trade (INT), which supported industrialization through supply chain enhancements; and Revealed Comparative Advantage (RCA), which targeted competitive export sectors. The study findings indicate that the Tariff + NTM scenario yielded better trade outcomes, with net exports for fruits projected to reach 115.79 billion TZS and for vegetables 86.26 billion TZS by 2035, compared to 112.25 billion TZS and 83.48 billion TZS, respectively, under the Tariff-only scenario. The RCA and INT schedules generated the most significant trade surpluses, highlighting the importance of strategic tariff reductions and targeted trade facilitation. Key policy recommendations include reducing NTMs through streamlined customs procedures, investing in export-support infrastructure such as cold storage and transport networks, and enhancing competitiveness through value addition and regional market integration. These measures would maximize the benefits of AfCFTA in strengthening Tanzania's agricultural trade, fostering capital reinvestment, and ensuring long-term economic resilience.