African Continental Free Trade Area (AfCFTA)

Our Work with AfCFTA:

PanAAC, plays a key close role in ensuring an all-inclusive agribusiness, agroindustry value chain. Partnerships with key industry players in the public and private sector will enhance growth of SMEs. Through such partnerships, SMEs will heavily benefit.

In Kenya, SMEs form the national cornerstone for economic development. The fast-growing enterprises are a key enabler to the governments big 4 transformational agenda. Forming the backbone of Kenya’s economy, SMEs employ 98% of the total population contributing to 33% of the national GDP. Added to that, SMEs account for 80% of businesses and contributing 40% toward the national income. As PanAAC we shall collaborate with all stakeholders and play an active role in the continental arena to enhance the following:

 

Set-up Agro-processing Economic Zones

It is important that continental trading partners work directly to setting up of economic Agro-processing zones. This initiative will work to maximize intra-continental trading. For instance, Africa produces the highest number of cocoa beans globally, yet import majority of its chocolates. Adding merit to the Agro-processing value chain will give birth to more innovative competitive goods.

 

With respect to goods, while it is theoretically possible to set up operations in a few key jurisdictions and sell throughout the bloc, non-tariff trade barriers (NTB) and measures that participating countries could take to protect local industry might cause disruptions to remote selling activities. Examples of NTB recently implemented by some African countries include border closures, denial of permits and imposition of special taxes in the form of surcharges on imported products. While there may be valid reasons for taking such measures, any interruption to market dynamics could have serious consequences for an exporting enterprise. For that reason alone, establishing business operations in a large market that can absorb a significant amount of production would mitigate risk and, if combined with a well-developed transportation network that can reach potential satellite markets, it could be the ideal growth platform.

 

Effective Credit Guarantee Schemes

Through AfCFTA, SMEs can take advantage to collaborate with the financial institutions to ease access of finance and credit through established credit guarantee schemes. In Kenya, the participating lenders and borrowers will utilize this opportunity in the most responsible way to ensure that the objective of stimulating our economy and preserving and creating employment is realized. If all goes well with this first phase in the next three-years, it is anticipating the National Treasury may make available an additional Sh10 billion to the scheme. (Business Daily)

Digital platforms essential for survival

Kenyan SMEs can leverage on innovation and technology. This will accelerate trade in the digital platform. Kenya was among the top five African performers in the UNCTAD B2C e-commerce index 2019. The country’s 2019 Digital Economy Blueprint outlines the government’s commitment to using disruptive technology to help it leapfrog. To turn the blueprint into action, the Communications Authority of Kenya requested UNCTAD to help it formulate a national e-commerce strategy. This will include an action plan with recommendations for targeted policy interventions.

Women SMEs driving AfCFTA

Women have to be included in the AfCFTA narrative. They have been the bedrock of majority of Kenya’s MSMEs. Behind the 74% of distribution of foodstuff in Africa, women have taken the lead. As stipulated by given microfinances, banks such as KCB & CBA M-pesa records, 80% of women are the institutions early borrowers. Women will wake up as early as 5:00am to begin trading activities. On that account, women-led SMEs must leverage on technology and new business models to tap opportunities within the AfCFTA.

 

SMEs call to Action

SMEs must strengthen and create themselves among trade associations and cooperatives. This will aid in receiving timely relevant information. In addition, accentuating SMEs continental bargaining power.

SMEs should invest in high potential sectors. Through AfCFTA, they can walk through their options towards a more competitive global advantage. Key sub-sectors to invest is: textile, weaving apparel, wood and paper, leather, transport equipment, electronics, tourism and specialized service sector.

Own leadership of AfCFTA. With a common voice, SMEs can engage with higher bodies such as AU, African governments and trade bodies. They must ensure maximum utilization of given opportunities. In the process, hold AfCFTA accountable for the implementation and laid out regulations and policies.