“Africa is a continent with huge economic potentials which need to be utilised more effectively. The African Continental Free Trade Area can be key in this regard.” This is how German chancellor Angela Merkel described the African Continental Free Trade Area (AfCFTA) in 2019. A year later, in the face of the COVID-19 pandemic, free trade has become more important than ever as a catalyst for African economies to grow. The AfCFTA is an ambitious, pan-African, continental trade agreement aimed at boosting intra-African trade against a backdrop of Africa’s limited success in establishing a significant and lasting presence and command in its backyard and the global value chains and markets.
In terms of size, the AfCFTA is the world’s largest free trade area since the creation of the WTO in terms of number of signatories (54) with a huge market of 1.2 billion people and GDP of US$2.5 trillion. In terms of scope, the AfCFTA goes beyond traditional Free Trade Agreements (FTAs) which normally only cover Trade in Goods. AfCFTA also includes Trade in Services, Investment, Competition Policy and Intellectual Property Rights (IPR) among others.
The SEAMPEC project under EAC-GIZ, together with the continental AfCFTA support programme, assists the EAC Secretariat in fostering coordinated negotiations and realisation of the AfCFTA at regional and national level within the EAC. Furthermore, support is given to Partner States in finalising phase I negotiations on Trade in Goods and Trade in Services and enhance their participation in phase II negotiations on Investment, Competition Policy and Intellectual Property Rights, conducting studies and capacity building programs in preparing for implementation of the AfCFTA.
A commonly cited obstacle impeding intra-African trade is the lack of information on trade rules. Formal and informal traders have limited access to information regarding market access conditions for goods and services, sanitary and phyto-sanitary standards, technical standards authorization and certifications required, taxes and tariffs payable, rules of origin, and customs processes and procedures. Lack of information often leads to higher transaction costs for traders which increase their overall cost of doing trade across borders. In addition, they are more likely to fall prey to corruption, since they are unaware of their rights as well as conduct of processes and procedures.
Thus, providing access to relevant practical trade information will enable the private sector, particularly SMEs, women and youth traders, to be more price competitive and fully exploit the trade opportunities. To this end and to support trading under the AfCFTA which is scheduled to start in January 2021, EAC-GIZ is producing a simplified, user-friendly and well-illustrated guide on AfCFTA trade and trade-related rules. This guide will familiarise the EAC business community with the objectives, rules and procedures of the AfCFTA market. In addition, EAC-GIZ will support the EAC in its efforts to sensitise the private sector and public in advance to ensure that key stakeholders, including SMEs, can effectively participate and benefit from the AfCFTA to achieve the objective of shared growth across the region. EAC-GIZ will also contribute to strengthening the technical and administrative capacities of the EAC Secretariat for it to effectively play its coordination role in the realisation of the AfCFTA in the EAC region.
Photo: ©GIZ/Mulugeta G/Kidan