Why Africa implements continental free trade area

Why Africa implements continental free trade area

Trade

By Andualem Sisay Gessesse – Kigali, Rwanda – It has been eight months since 44 African countries subscribed to advance free movement of people and goods within the continent by signing the African Union’s African Free Continental Trade Area Agreement (AfCFTA) agreement.

In order to be implemented, the agreement needs ratification of the protocol by at a least 50% of the countries signed the agreement within one year. Meanwhile after eight months, only 11 countries have ratified it by their national legislative organ.



Commenting if the it is possible to get 11 more countries ratify the protocol, “I am confident that we will get the 22 countries ratified the AfCFTA by March 2019” says Giovanie Biha, Deputy Executive Secretary of the United Nations Economic Commission for Africa (UNECA).

The UNECA has been one of the promoters of intra Africa trade and was assiting countries to give attention to the implementation of regional blocks ad boost their economies and create jobs for Africa’s fast growing number of youth. One of the areas the UNECA has been helping includes conducting cost benefit analysis of AfCFTA, which will help the countries avoid fear of allowing the free movement of goods and people.

“We have started journey. It is a journey very exciting …When it comes to ratification, some countries have to go through their parliamentary process; some countries have already started this process while there are other countries that still have some questions,” says Biha.

“The AfCFTA is really the opportunity to open the market and to be able to exchange the goods that we are producing within this [African] market… In the coming months UECA will be helping ten Africa countries to develop AfCFTA implimenting strategies,” she said, indicating that the experience of trading value added (manufactured) goods within Eastern African countries is a good story the needs to be expanded within the continent.

“This is already a very good story in terms of the continental free trade area. That means we have a base on which to build,” she said, at a press conference today at the sideline of the 22nd meeting of the intergovernmental committee of experts in Kigali Rwanda.

The experts gathered from 14 Eastern African countries have started discussion today on the implementation of the AfCFTA in Eastern Africa.

When it will be implemented AfCFTA will make uniform import tax of Africa products imported by the countries in the continent ratified the agreement. Reports show that the proposed import tax by AfCFTA will be around 15% on average.

A study by UNECA shows that most of the eastern Africa countries spend more hard currency for importing manufactured goods – both consumption and capital goods.

If the AfCFTA is fully implemented, the value of exports of the Eastern Africa to the rest of the continent would increase by almost a third, with processed food and manufacturing products being the main beneficiary sectors, according to UNECA analysis.

In addition to trade in goods, the AfCFTA is also expected to increase trade in services among Africa countries boosting performance of sectors such as, tourism, fiancé ad information communications technology.

Meanwhile reports show that so far only 27 Africa countries out of the total 49 who signed AfCFTA have agreed on the free movement of Africans.

“You can’t love African goods and hate Africas. Integration is about give and take,” says said Richard Sezibera, a former secretary general of the East African Community regional bloc recently became Rwanda’s Miister of Foreign Affairs.

The Eastern Africa region has been registering steady increase in services exports from a total of $6 billion in 2005 to $17 billion in 2016.

Commenting why the ratification is delayed, Uganda’s Finance Minister Matia Kasaija, says the reason is because may Africa countries ted to prioritize their individual country interest neglecting the benefit Africa countries get when they stand together.

“When we go to negotiate with others as East African, we are not talking as one. Every country talks about its country. Everybody says mine. We use wrong eye glasses. Instead of seeing far ad say united we are strong and divided we fall; we started operating in our little circle. So, it will take time to change a system. It is not something you can change overnight. Good things will sell themselves. When people began to see the value, they will sign,” the minister said.

The latest study by Rock and Fellers Foundations shows that 83% of the people surveyed believe that AfCFTA is important in supporting economic development in the continent.

“The people have already welcomed the AfCFTA. They are waiting for the politicians to facilitate its implementations,” says Rwakunda Umulisa Amia, Chief Macroeconomist at the Ministry of Finance of Rwanda, who believes that the implementation of the continental free market will have spillover effect in improving social lives and reducing poverty in Africa beyond just economic growth.

Comparing the time it took the 11 countries to ratify the protocol with similar trade agreements signed in other parts of the world, the AfCFTA is signed faster, according to Rwanda’s Minister of Finance and Economic Planning Uzziel Ndagijimana, who is also optimistic about the implementation of AfCFTA by March 2019.

If it is realized the AfCFTA will be the largest common market I the world with population of 1.2 billion. In 2016, intra-African exports made up 18% of total exports compared to 59% and 69% for intra-Asia ad Intra-Europe. It is estimated that by 2022 intra-African trade will increase by 52.3% (34.6 billion), compared to a baseline scenario without ad AfCFTA.

“We are not competeing with each other [when we impliment AfCFTA]… The choice is to be soverign poverty or grow together,” says Richard Sezibera.