African Continental Free Trade Area (AfCFTA)

What are the Opportunities available AfCFTA?

Job Creation

Kenya’s economy alone has numerous skilled unemployed youths. Through the AfCFTA, there will be creation of over 2million cross-border jobs in transformational industry sectors. However, for Industrialization, diversification and job creation in Africa, however, cannot happen without continental economic integration. The recent signing of the historic AfCFTA creates an opportunity for inclusive and sustainable economic development, moving away from structural stagnation and commodity-based economies.

AfCFTA will provide great business opportunities for trading enterprises, businesses and consumers, unlocking trade and manufacturing potential and further enhancing industrialization in Africa. With the AfCFTA agreement, exports of processed or intermediate goods will increase rapidly, further opening the way to Africa’s economic transformation to dynamically diversified economies and globally competitive industrial production locations according to the Africa Policy Review.

In addition, higher trade among African countries will also strengthen African regional value chains, making it easier for local small and medium-sized enterprises, which account for around 80 per cent of Africa’s businesses, to build competitiveness, supply inputs to larger regional companies, participate in, and upgrade to global value chains.

This will give unprecedented opportunities to exploit the full agri-business potential of the continent. Strengthening the continent’s agro-industries can generate high social and economic returns, create jobs in rural areas and for young women and men, as well as responding to the urgent need to ensure food security and poverty reduction.

By taking bold actions in advancing the agenda of the AfCFTA, using it as one of the best means of promoting industrialization, African countries are well-positioned to build an Africa that can become a strong link in today’s interdependent global economy.

Expanding into new markets

Member states can benefit from fresh continental partnerships and linkages. Viable innovative ventures will give birth to new products and services. High tariffs and non-tariff barriers such as customs delays and administrative bottlenecks at border posts underscore the challenges facing African traders and at the same time accentuate a strong desire by traders for a free trade zone. The AfCFTA eliminates tariffs on 90 per cent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons.

At the most basic level, the market and legal framework must be studied for each country of interest, taking into account such country’s track record in handling foreign investment and cross-border trade. In addition, the degree of commercial presence required as a condition of market access must be assessed, along with the permits and registrations to be procured for each activity. Domestic laws are implicated in much of the detail set forth in the AfCFTA agreement, and the regulatory framework for a particular activity could be drastically different from jurisdiction to jurisdiction.

Rules of Origin

With respect to goods, 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. (Global Compliance Rules)