AfCFTA: 8 African countries kick-start free trade with 96 products

Eight countries have commenced guided trading under African Continental Free Trade Area (AfCFTA).

The initiative seeks to test the operational, institutional, legal, and trade policy environment under the AfCFTA, and to send an important positive message to African economic managers.

Rationale

The guided trade initiative aims to test the readiness of participating state parties under the AfCFTA, demonstrate that the AfCFTA trading documentations are operational and viable and confirm that the Customs and Revenue Authorities of the participating countries under the AfCFTA agreement are ready to process imports and exports.

It is also expected to serve as a gateway to encourage continued trade under the AfCFTA, resulting in a multiplier effect and increased opportunities for SMEs, youth and women in trade and ultimately establishing sustainable and inclusive economic development.

The 8 countries

The eight countries are Ghana, Kenya, Rwanda, Tanzania, Egypt, Mauritius, Cameroon and Tunisia.

5 African Union regions

These countries were selected to represent the five African Union regions, namely: Western, Central, Eastern, Southern and Northern Africa respectively.

Matchmaking businesses and products

The guided trade initiative facilitates trade under AfCFTA through matchmaking businesses and products for export and import between these interested state parties.

96 different products

At least 96 different products from the eight countries could be freely traded under the rules of AfCFTA.

Types of products approved so far

Products approved to trade under AfCFTA include horticultural products, pharmaceuticals, rubber, aluminum kitchenware, sugar, steel, and wooden products.

Duty-free and quota-free trading

These products originating from Africa will enjoy duty-free and quota-free trading among the partnering countries.

Tariff schedules

According to the AfCFTA Secretariat, participation in the guided trade initiative depends on whether countries have submitted their tariff schedules in accordance with the agreed modalities to trade preferentially amongst themselves.

Accra launch

Launching the guided trade initiative in Accra, Secretary-General of AfCFTA Wamkele Mene, said ”this is the moment the founding mothers and fathers of the Organization of African Unity have longed (for).

“We have finally honored and made reality the vision of those who liberated our continent.”

“We are connecting East Africa to West Africa, North Africa to Southern Africa. Trade will be the driver of inclusivity, creating opportunities for young Africans.

“So we have taken the first journey today, and I hope in 15 years, we will have succeeded in lifting millions and millions of Africans out of poverty.”

Products double or triple by next year

Mr Mene, said the launch was marked with a total of 96 products traded by eight countries and the number is expected to “double or triple” by next year.

Africa’s economic development at stake

He said it is more than just a legal test and more than just ratification because it is Africa’s economic development at stake.

“I am extremely proud that we are able to demonstrate to ourselves as Africans that we have the capacity and inclination to achieve this,” he said.

More countries expressing interest

Mr. Mene announced that more and more state parties are expressing interest as they conclude the process of domesticating the AfCFTA in their law.

East African member states dominate

East African member states have dominated the list of countries that have domesticated AfCFTA adequately to facilitate commencement of trade under the trading bloc’s framework.

Three out of the eight countries that have set the stage for trading under AfCFTA are from East Africa.

Kenya and Uganda export to Ghana

Kenya and Uganda have already undertaken trade under the AfCFTA Guided Trade Initiative with Kenya having exported exide batteries worth $77,000 on September 23 to Ghana following importation by Yesudem Company Ltd.

Kenya exports tea to Ghana

Kenya made its second export under the AfCFTA Guided trade initiative on October 5 which consisted of tea exports to Ghana.

The tea consignment exported from Kenya to Ghana had been produced by small-scale farmers and so there is a significant opportunity for small-scale.

Ghana to export ceramics to Cameroon

Under the guided trade initiative, Keda Ceramics of Ghana will export ceramic tiles to Cameroon.

Ghana to export palm kernel oil Kenya

Benso Oil Palm Plantation is also slated to export palm kernel oil to Kenya and Ghana will also receive approved goods from participating State Parties.

Minister for Trade and Industry Alan Kyerematen noted that the launch of guided trade among seven countries was symbolic in many ways.

“It symbolizes that AfCFTA is not just on paper but a reality. And we are moving from talk and negotiations to action.

“It also symbolizes that governments in Africa who have been involved in the negotiations are now giving way to the private sector to make it a reality,” Kyerematen stated.

Ghana building capacity of 200 companies

The National AfCFTA Coordination Office is also working with over 200 identified companies to help build their capacities to enhance competitiveness in the African markets.

On January 1, 2021 the AfCFTA Secretariat formally started trading under the AfCFTA agreement.

Since then, the Secretariat and State Parties have been working to put in place structures, procedures, processes, protocols, and documentation needed to enable the commencement of commercially viable trade amongst State Parties.

Africa still faces significant challenges in navigating logistical hurdles which present non-tariff barriers to the acceleration of trade under the Guided Trade Initiative.

The United Nations Conference on Trade and Development (UNCTAD) places intra-African exports at 16.6% lagging far behind Europe’s 68.1% and Asia’s 55%.

The agreement establishing the AfCFTA was signed in Kigali, Rwanda, on March 21, 2018.