Spanners in AfCFTA Agreement
Trading under the African Continental Free Trade Area (AfCFTA) is set to commence January 2020 but expert opinion suggests there are obstacles that stand in the way of successful operationalization of the historic agreement by African Heads of State.
28 Countries have so far ratified the agreement committing to open their borders and remove tariffs and non tariff barriers to allow smooth flow of goods and services between African countries or sub-regional blocks.
Malawi has not ratified the agreement yet which means her industries will not be part of the business activity once trading under the agreement commences.
According to spokesperson in the ministry of trade, Mayeso Msokera, the private sector in Malawi wants a National AfCFTA implementation strategy first before government ratifies the agreement. He says “our target is to have the national strategy in place by January 2020”.
The spirit of the AfCFTA agreement is that countries will have to give up their sovereignty to some extent, and one of the contentious matters on this is the movement of natural persons (MNF) from one country to another.
But Dorothy Tembo, the Deputy Executive Director at International Trade Centre (ITC) has told Zodiak Online some countries are “skeptical” on the agreement largely for “concerns on security”.
“Some states still have Visa restrictions that stand in the way of free movement within the continent and you can’t expect efficiency if you have to acquire a Visa in every country you want access to” She says.
Other concerns are around health, loss of jobs for citizens and loss of revenue. Mrs. Tembo was speaking during a side meeting discussing the AfCFTA at this year’s African Industrialization week underway in Ethiopia’s capital- Addis Ababa.
“Discussion around this is still ongoing and I hope our leaders can reach an agreement soon,” Mrs. Tembo added.
Under the trade agreement, member states must also develop and adopt own national AfCFTA strategies to aid smooth operationalization of the agreement. But this has not happened in most of the member states.
Chief Technical technical advisor and head of implementation and coordination unit in the department of Trade at AU, Rongai Chizema, observes that the longer African countries take to set up their national implementation strategies, the longer it will take the continent to maximize potential of the agreement.
The Economic Commission for Africa (ECA) estimates that the removal of tariff barriers between African countries through the AfCFTA would result in 15-25 percent increase in Intra-African trade by 2040.
On the other hand, Mrs. Tembo the deputy MD at ITC says AfCFTA agreement brings trade opportunities in excess of 1.5 billion dollars annually.
A Malawian young Entrepreneur Nthanda Manduwi who attended the World Export Development Forum in Addis Ababa, says African youth must take their rightful roles and aim to seize available opportunities in the AfCFTA.
She says with the increasing numbers of youth unemployment on the continent, the AfCFTA provides a massive opportunity to cover the gap.
“Malawi being landlocked, the agreement opens our borders and reach out to a bigger market. For young people we have been trained to find a job but this gives us an opportunity now to actually create jobs,” She says.
Aid for Trade
The Enhanced Integrated Framework (EIF) an international organization working with least development countries, agrees that Trade and investment under the AfCFTA will be at the heart of ending poverty in Africa. Of the World’s 47 least-developed countries (LDC), 33 are in Africa.
Speaking to Zodiak online on the sidelines of commemorations marking Africa’s Industrialization week, deputy managing director at EIF Annette Ssemuwemba reiterated the need for African governments to be practical with the philosophy of Aid for trade.
She says the EIF considers aid for trade resources as catalytic only meant to leverage other available resources. She gave an example of Mali where they invested 1.5 million dollars and the government there put in 3 million dollars more in a Mango value chain initiative.
Ssemuwemba said “Many of these (LDC) countries have supply constraints and institutional capacity constraints and out nature of support to these countries goes to address these areas with a view to give them some competitive advantage”.
The UN Economic Commission for Africa observes that for decades, Africa’s intra-continental Trade is more diversified than its trade outside the continent. However the share of intra-AFrican Trade is low at 17 percent in 2017. The African Union and all implementing partners hope the AfCFTA agreement is the magic bullet to change this narrative.