About 31 African countries are earmarked to start trading under the Africa Continental Free Trade Area (AfCFTA)’s guided trade initiative this year after seven already commenced as the close of 2023. The AfCFTA—the continent’s single biggest trading bloc—is among the African Union’s (AU) flagship projects for implementation of its ‘Agenda 2063: The Africa We Want,’ and is aimed at bringing together all the 55 member states of the AU in an intra- African continental free trade area. It would create a market of more than 1.3 billion people and a combined gross domestic product of up to $3.4 trillion. Journalist WILLIAM KUMWEMBE engages AfCFTA Director for Institutional and Programme Coordination Prudence Sebahizi on strides made.
Firstly, give us a picture on strides made to ensure African countries start trading under the AfCFTA?
The AfCFTA has a long history as you know negotiations started in 2012 when the decision to establish the AfCFTA was made by heads of state and government. We spent about three years getting ready; building capacity and creating awareness among state parties. In 2015, in June precisely, a roadmap was approved by heads of state and government to start negotiations and it took about three to four years to conclude negotiations, then the agreement was signed in March 2018. After concluding the agreement, countries had to ratify it for it to enter into force which took one full year. In May 2019, the AfCFTA agreement came into force. That is when we had to waste almost two years because of Covid, but the official trading was launched in January 2021. Some progress has been made, until in 202 when, as AfCFTA secretariat, we launched the Guided Trade Initiative which was to see how best we can guide the private sector to go through administrative processes to trade within the AfCFTA. The whole concept was to provide a checklist which Small and Medium Enterprises can use if they want to export or import products under the AfCFTA. We started with seven countries in October 2022, today we have about 35 countries that are already participating under the initiative.
What is your impression on countries willingness and capacity to trade under the AfCFTA?
We have about 47 countries that have ratified the agreement, out of 54 that have signed. Only one country has not signed the agreement yet. But out of those 54 who have signed, 47 have already ratified which confirms that they are legally ready to start implementing their commitment. Out of those 47, 35 of them are already facilitating trade which means, if you import goods, you will get a tariff reduction on import duties. They will facilitate trade using their national institutions. There are a number of trade facilitation measures that countries have put in place to facilitate trade under AfCFTA.
There are fears of protectionism, especially among countries whose economies are small and fear of being perceived as a dumping site. What is your take?
I never see these as constraints for two reasons; one, those countries that feel that they are smaller than others are the ones that need a bigger market to attract investors. They will have to rely on the outside market. Number two, which is a very important thing to understand, African countries have been trading among themselves at less than 20 percent. More than 80 percent of the activities are traded with countries outside Africa. And those countries have been trading with bigger economies outside Africa. So, if their industries have not suffered from competition from those bigger economies outside Africa, how then can they fear competitions from fellow African countries? This then demystifies the misconception that there is fear of competition. Then, number three, the AfCFTA is not just about access to the market, AfCFTA is a developmental project. You couple access to the market with an industrialisation programme. These small countries will take advantage of the bigger market to integrate into the regional value chain. If a small country cannot produce a product on its own, at least they can produce part of that product to feed into the whole value chain. So, those so-called smaller economies have an advantage of partnering with bigger economies for them to integrate in the value chain for their own industrialisation and for them to develop.
What is the future of intra-trade?
Africa has been trading. The only challenge we had is that we have only been trading in low value products which creates imbalance because we spend a lot of money on importing. We rather sell our unprocessed products and we consume processed products which we normally import. So, the potential of AfCFTA is to change that narrative; we start adding value to our raw materials. We already have land and labour, we can import capital. Then once we have added value to the products, we will be able to trade at least at 50 percent in terms of intra-Africa trade. There is a huge potential to industrialise if we trade among ourselves, create jobs, and also increase the volume of trade and bridge the gap of trade balance deficit.
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