The Sunday Mail
THE African Continental Free Trade Area (AfCFTA) represents a major shift in trade and commerce for the continent, and offers economic opportunities to those that are prepared. AfCFTA is a free trade area founded in 2018, covering almost the entire continent. 54 of the 55 African Union nations have ratified the agreement, with Eritrea the only country still to ratify.
Among other measures, tariffs will be removed from 90 percent of goods and non-tariff barriers will be reduced or eliminated. This will reduce red tape, lowering compliance costs for traders, and ultimately making it easier for African businesses to integrate into global supply chains.
AfCFTA is expected to Increase of intra-Africa trade by 15 to 25 percent ($50 billion to $70 billion) by 2040 which will see a $3, 4 trillion increase in African GDP by 2030. Zimbabwean businesswomen under the auspices of Comesa Women in Business (COMFWB), held a 2-day workshop in Harare recently to prepare their businesses to export and take advantage of AfCFTA.
To put this opportunity in context, one needs to first understand the current situation. Trade between African countries accounts for only 16 percent of the continent’s exports and 13 percent of its imports (United Nations Conference on Trade and Development (UNCTAD). What does this mean? African countries trade more with countries from outside Africa than they trade among themselves. For example, African trade with Europe is twice the annual value of inter-African trade (the European accounts for 31 percent of Africa’s exports and 29 percent of its imports).
African exports to the world consist primarily of raw materials and unprocessed goods. In contrast, when African countries trade with each other they exchange more manufactured and processed goods. In fact, manufactured goods make up almost half of regional exports at 42 percent. With AfCTFA, the value of manufactured goods traded within the continent is set to increase, providing growth opportunities to African manufacturers.
One might well ask if we have not seen all this before? After all, there have been many previous initiatives to increase intra-African trade such as ECOWAS, COMESA and SADC which also provide their members with tariff-free trade. The problem is that such agreements are often followed by establishment of trade barriers in the form of confusing cross border procedures and other “Non-Tariff Barriers” (NTBs).
These NTBs come in several forms including excessive paperwork; long queues at government offices responsible for issuing permits and other paperwork; office hours kept by officials fail to coincide with the actual timing the goods arrive at the border; officials are unnecessarily heavy-handed in order to solicit payment for “special” treatment; officers at the ports and border interpret applicable rules and procedures differently, creating confusion and adding to costs and correction and appeal mechanisms may not exist – or are very cumbersome.
The difference this time is that AfCFTA is designed to address those shortcomings. AfCFTA has established an NTB Sub-Committee to oversee progress on the elimination of NTBs and undertake periodic reviews on each country’s efforts. Each country is also required to establish a National Monitoring Committee as well as National NTB Focal Points.
Exporters will therefore be able to report unfair requirements to the NTB focal point for their country. These measures will improve the provision of information, as well as improving the response to enquiries and complaints about problems at the border. AfCFTA will also help assist traders to comply with technical measures.
African Small and Medium scale Enterprises (SMEs) should be able to compete favorably for their share of the anticipated increased market. Similar tastes and preferences for goods and services across African countries gives them an edge over competitors from other continents. Low market entry barriers to other African countries as a result of tariff reduction will lead to competitive prices for SME products and services.
The mutual proximity of African countries will lower transport and logistics costs. Further, similar language and cultures will make it easier for SMEs to trade across borders.
The COMFWB Zimbabwe Chapter therefore convened a workshop attended by 40 businesswomen to prepare themselves to take advantage of AfCFTA. The women were drawn from across the country. The workshop started with each business taking a self-assessment tool provided by the International Trade Centre’s SheTrades platform.
This helped them understand areas of their business that may need strengthening as they prepare to export.
The self-assessment focused on four areas: strategic competence – ability to define and seize on business opportunities; marketing and sales competence – ability to engage in market transactions and take care of the operational aspects of reaching clients, closing profitable sales orders, and setting up distribution channels; production competence – ability to produce and ship products as well as resource management competence – ability to ensure the company has access to the necessary resources and makes an efficient use of them. After the self-assessment, women were directed to free learning courses and webinars provided by SheTrades to help them cover gaps.
The group was then taken through technical aspects of AfCFTA including how to raise finance for trade, how to research and select profitable export markets, identifying the right partners for legal and logistical support as well as how to comply with foreign standards and packaging requirements.
Chairperson of COMFWB Zimbabwe Chapter, Mrs Birgitta Matenganzara said whilst most women started international trade as cross-border informal traders whose desire was to feed families, today they have much broader ambitions. “As women we want to help Zimbabwe take the lead in exploiting AfCFTA opportunities. Our goal is to help industrialise the nation whilst increasing cooperation with other women in Comesa. We call upon other stakeholders and trade promotion organisations to engage with women to drive trade”.
AfCFTA is expected to drive a Made in Africa revolution. Zimbabwe with its relatively good infrastructure, educated workforce and established diaspora in Africa is uniquely placed to benefit. However, success requires planning and a clear strategy. Zimbabwean women and mothers are the bedrock of our society, and with efforts such as these, they are positioning themselves to also lead the export revolution.
Allen Mukwenga is an entrepreneur and consultant.