HOLDING BACK

EAC private sector want key AFCFTA issues finalised

AFCTA representatives have agreed on only 87 per cent of rules of origin for all products covered by the trade area.

In Summary

•Goods whose rates are yet to be agreed on include textile, clothing, edible oil, and motor vehicle, experts note these are huge policy implications.

•AFCTA representatives have agreed on only 87 per cent of rules of origin for all products covered by the trade area, comprising about 3,800 tariff lines.

EABC chief executive officer John Bosco Kalisa, TMEA director of business competitiveness Anataria Uwamariya and expert on international trade and regional integration Prudence Sebahizi.
EABC chief executive officer John Bosco Kalisa, TMEA director of business competitiveness Anataria Uwamariya and expert on international trade and regional integration Prudence Sebahizi.
Image: SHARON MAOMBO

In a move to protect locally made goods, EAC private sector players have called for fast tracked negotiations on the rule of origin.

During a consultative meeting on the African Continental Free Trade Area (AfCFTA) on Tuesday, members said the finalization of RoO negotiation is important as the outstanding products are central in EAC regional value chains and job creation.

Although trading under AfCFTA terms started officially in January 2021, many problems over rules of origin remained unresolved, making it difficult to identify the source nation of many products, and consequently the preferential tariff applicable.

So far, AFCTA representatives have agreed on only 87 per cent of rules of origin for all products covered by the trade area, comprising about 3,800 tariff lines.

The February agreement removed a major hurdle to reduced tariffs roll‑out under the trade agreement

Goods w​_hose rates are yet to be agreed on include textile, clothing, edible oil, and motor vehicle, experts note these are huge policy implications.

Forty three countries out of 55 have ratified the AfCFTA Agreement. 

Intra-Africa trade is currently at a low of 18 per cent compared to common markets such as the EU which is at 67 per cent. AfCFTA is set to boost trade to over 70 per cent.

John Bosco Kalisa, EABC CEO called for compliance to the agreed-upon protocols and implementation of customs processes such as tariff reductions for trade to materialize under the AfCFTA.

Non-Tariff Barriers remain a challenge to movement of goods in regional trade blocs, and further across countries in the continent.

"AfCFTA should be anchored on strong private sector engagement," Kalisa said calling for trust-building and mindset shift to promote Made in East Africa and Africa products.

The Covid-19 pandemic and war in Ukraine disrupted Africa’s trading patterns and economic growth prospects.

The United Nations-Economic Commission for Africa (ECA) last month estimated that the Covid pandemic led to the contraction of Africa’s real GDP by three percent (3%) in 2020 and Africa’s debt-to-GDP ratio increased by 10 to 15 percentage points by 2021.

Kenya GDP contracted by 0.3 per cent  in 2020, hit by the economic fallout of Covid-19, compared to five per cent in 2019.

Industry leaders have called for import substitution to boost intra-Africa trade. They said  EAC regional value chains should feed seamlessly into the continental value chains.

The leaders have also underscored strong trade dispute resolution mechanism and improved infrastructure connectivity on regional trade pact.

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.

Backers say it will boost trade among African neighbours while allowing the continent to develop its own value chains. The World Bank estimates it could lift tens of millions out of poverty by 2035.