A-Level Economics May/June 2025 Q1(d): Assess the extent to which closer membership of the AfCFTA may help South Africa to ach…

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  Closer membership of the African Continental Free Trade Area (AfCFTA), which aims to create a single market for goods and services, presents both significant opportunities and challenges for South Africa's economy.

  On one hand, the AfCFTA could be a powerful engine for economic growth. By removing tariffs on 90% of goods, it opens up access for South African firms to a vast continental market of over 1.3 billion people. This could stimulate export-led growth, as increased foreign demand for South African exports would lead to a rise in aggregate demand (AD), boosting output and employment. (M1) Furthermore, the increased competition from other African producers would pressure South African firms to become more efficient and innovative. This could lead to lower prices and higher quality goods for consumers, increasing their real income and boosting consumption. It may also attract Foreign Direct Investment (FDI) from multinational corporations seeking a production base to serve the entire continent. (M2)

  On the other hand, closer integration carries substantial risks. Many South African industries, particularly in manufacturing and agriculture, may struggle to compete with lower-cost producers from other African nations. This increased competition could lead to a fall in demand for domestically produced goods, causing firms to lose market share and reduce output. (M3) In the short to medium term, this could lead to firm closures, a rise in structural unemployment, and a potential slowdown in economic growth, exacerbating the very difficulties the country is trying to escape. A surge in cheaper imports without a corresponding rise in exports could also worsen South Africa's current account deficit. (M4)

  In conclusion, the extent to which the AfCFTA helps South Africa will depend heavily on the competitiveness of its domestic industries and the government's ability to manage the transition. While the potential for long-term, export-led growth is significant, the short-term adjustment costs, such as job losses in uncompetitive sectors, cannot be ignored. (E1) Therefore, while the AfCFTA is not a panacea, it is likely to help South Africa achieve necessary growth to a large extent, provided that it is complemented by domestic supply-side policies that improve infrastructure, skills, and the business environment to capitalise on the new opportunities and mitigate the risks. (E2)

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  How the marks are awarded

  • M1 — Awarded for explaining that the AfCFTA opens up new markets for South African firms, which can lead to export-led growth and a rise in aggregate demand.
  • M1 — Awarded for explaining that increased competition can force domestic firms to become more efficient, leading to benefits like lower prices for consumers or attracting more FDI.
  • M1 — Awarded for explaining the drawback that domestic businesses will face intensified competition, which could reduce demand for their goods.
  • M1 — Awarded for developing the drawback, explaining that intense competition could lead to firm closures, higher unemployment, and a potential fall in economic growth.
  • E1 — Awarded for the balanced evaluation in the final paragraph, which weighs the potential for long-term growth against the short-term adjustment costs like job losses.
  • E1 — Awarded for the justified conclusion that directly answers the 'to what extent' part of the question, judging that it will help 'to a large extent' but with the important condition of supportive domestic policies.

  Common mistakes

  • Providing a one-sided answer by only discussing the benefits of free trade, thereby failing to access the marks for drawbacks and evaluation.
  • Writing a generic essay on free trade without applying the context to South Africa and the AfCFTA specifically.
  • Failing to provide a concluding judgement that addresses the 'assess the extent' command in the question.
  • Simply listing points for and against without weighing them up to show evaluative thinking (e.g., considering short-run vs. long-run effects).

  Examiner tip: For any 'assess' or 'evaluate' question, structure your answer with analysis of both sides of the argument before making a final, justified judgement that weighs these points against each other.

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