INTRA-AFRICA TRADE

Tanzania, Burundi join EAC member states in AfCFTA deal

So far 42 countries have ratified the AfCFTA

In Summary

•Burundi ratified the AfCFTA on June 17,  while Tanzania endorsed on September 9.  

•Other EAC Partner States that have ratified the agreement are Kenya, Rwanda and Uganda.

East African Community Secretary General Peter Mathuki has hailed Burundi and Tanzania for ratifying the African Continental Free Trade Area Agreement (AfCFTA).

Burundi ratified the AfCFTA on June 17,  while Tanzania endorsed on September 9.  

So far, 42 countries have ratified the AfCFTA that seeks to boost intra-African trade.

Mathuki said that the AfCFTA would allow East Africans to access a large continental market and increase EAC’s exports to African countries outside the bloc. 

“It will also improve movement of people across Africa, advance trade and development aspirations and ultimately put the region in a better position to trade more with the rest of the world,” said Mathuki.

He further disclosed that the EAC had initiated a number of steps towards the implementation of the AfCFTA Agreement, adding that the ratification by Burundi and Tanzania would expedite the implementation of the agreement. 

Other EAC Partner States that have ratified the agreement are Kenya, Rwanda and Uganda.

South Sudan has signed the AfCFTA but is yet to ratify it.

Mathuki said that the bloc had almost finalised the submission of its tariff offers, which conform to the agreed modalities in addition to the schedules of liberalization of trade in services. 

“We have also prepared a draft strategy for the implementation of the Agreement, which takes into account the need for capacity building. It is presently under consideration by the Partner States,” said Mathuki.

he added:“Further, we are also fully involved in negotiations on the outstanding areas such as Rules of Origin, Trade in services as well as the phase II issues on investment, competition, intellectual property rights and e-commerce.

The Secretary General said that it was the expectation of the EAC that the AfCFTA would result in, among other things, lowering of business costs, promote local content and provide a platform for settlement of disputes. 

Mathuki said that EAC would leverage on its existing trade environment to reap maximum benefit from the AfCFTA, namely the: regional customs and trade instruments; interconnectivity of systems including customs and other border clearance agencies; One Stop Border Posts; national Trade Information Portals; simplified trade regimes; trade exhibitions and symposia, and; expansion of the EAC especially the anticipated admission of DRC into the Community.

One Stop Border posts have eased cross-border movement.

The Secretary General said that the EAC was currently operationalising a framework for trade development through the digitalization of markets, information dissemination, and showcasing the region’s products and market opportunities. 

The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization.

Trade experts are confident that initial steps towards its implementation will allow member states to double intra-African trade by 2025.

The African Development Bank, UNIDO and the ITC have each engaged with the private sector at the continental, regional and sub-national level to facilitate the African business community’s access to the new single market.

KENYA

Kenya and Ghana were the first nations to ratify the agreement, depositing their ratification on May 10, 2018.

President Uhuru Kenyatta recently affirmed Kenya's commitment to AfCFTA and rallied other African states to work closely with the agency's Secretariat to ensure that continental trade arrangement succeeds.

He said the success of the African Continental Free Trade Area (AfCFTA) will assist the continent overcome some of its pressing economic challenges.

Beyond its economic importance, Uhuru pointed out that AfCFTA has the potential to accelerate continental integration efforts by promoting people-to-people interactions through trade.

According to Trademark East Africa, one of the partners, the AfCFTA holds great potential for Kenya, which already exports 40 per cent of its total exports within the continent.

A World bank report says the trade pact could also speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.

The report suggests that achieving these gains will be particularly important given the economic damage caused by the Covid-19 (coronavirus) pandemic, which is expected to cause up to $79 billion in output losses in Africa in 2020.

The pandemic has already caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food.

Most of AfCFTA’s income gains are likely to come from measures that cut regulations and simplify customs procedures.

Tariff liberalization accompanied by a reduction in non-tariff barriers—would boost income by 2.4 percent, or about $153 billion.

Successful implementation of AfCFTA will help cushion the negative effects of Covid-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs.

In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries.

By replacing the patchwork of regional agreements, streamlining border procedures, and prioritizing trade reforms, AfCFTA could help African countries increase their resiliency in the face of future economic shocks.

“The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” said Albert Zeufack, the World Bank’s Chief Economist for Africa.

According to the report, the agreement will also reshape markets and economies across the region, leading to the creation of new industries and the expansion of key sectors.

The pact will significantly boost African trade, particularly intraregional trade in manufacturing. Intra-continental exports are set to increase by 81 percent while the increase to non-African countries would be 19 percent.

Since AfCFTA’s commencement on January 1, tariffs on 90 per cent of lines are in the process of being eliminated over five years for other African countries, and for least developed countries it will be over a 10-year period.

EAC

Meanwhile, the African Development Bank(AfDB has pledged more support to infrastructure, power connectivity and capacity building for the East African Community bloc.

Executive Director Amos Kipronoh who is in charge of Kenya, Eritrea, Ethiopia, Rwanda Seychelles, South Sudan, Tanzania and Uganda, said these investments are key to economic development and strengthening EAC integration.

He made the remarks when he paid a courtesy call on the EAC Deputy Secretary General in charge of Planning and Infrastructure, Steven Mlote, at the EAC Headquarters in Arusha, Tanzania last week.

Kipronoh commended the EAC for being the most integrated bloc among the eight regional economic communities (RECs) recognized by the African Union.

"The AfDB rates EAC very highly. You are truly on course to the community's intended objective of transforming the region into a single market for all factors of production for enhanced welfare and economic prosperity of the people of East Africa," he said.

AfDB has financed a number of infrastructure projects including the Arusha-Holili/Taveta-Voi Road, a transport corridor of the East African region that links the Northern Corridor at Voi to the Central Corridor across the common border at Holili/Taveta through Arusha.

It has also financed the Malindi-Mombasa-Lunga Lunga/Horohoro-Tanga-Bagamoyo highway that straddles the coastlines of Kenya and Tanzania.