Free trading: AfCFTA’s bold journey

By Antony Mutunga

In 2018, Africa decided to overcome tariff and non-tariff barriers to create a single market for goods and services, leading to the foundation of the African Continental Free Trade Area (AfCFTA). This was a chance to promote intra-African trade and, as a bloc, give Africa more power in terms of negotiations with other blocs or developed countries.

It was set to be implemented in 2020, but the pandemic delayed the process, leading the trade to start in earnest in January 2021. Since then, more countries have sent in their instruments of ratification. The number stood at 41 out of the 54 signatories (76%) as of April. So far, only Eritrea has remained the only country yet to sign the AfCFTA agreement.

Much attention has been placed on negotiations in phase one, which includes discussions on trade in goods and services and the settlement of disputes. This phase is more about rules – it will determine which goods are eligible for preferential treatment under the agreement.

According to the body’s secretary-general Wamkele Mene, the process is 88% complete. So far, he said, about 8,000 products have been placed under the World Customs Organization’s Harmonized System of rules of origin and tariffs.

“The AfCFTA tariff book, which is to include all rules of origin and the customs procedures that will apply to products, is close to being published and available to the member states – the traders will be able to identify the products they want to trade in, and know their rules and tariffs,” he says.

As phase one of the agreement nears conclusion, phase two negotiations have also commenced. Mr Mene says that phase two negotiations are focused on the intellectual property rights, competition policies and investment protection and are expected to be complete by the end of 2022.  

This year, a platform meant to facilitate free trading dubbed the “Pan-African Payment and Settlement System” (PAPSS) was launched, indicating that the free trade agreement is close to full implementation.

PAPSS was piloted in six West African countries that make up the West African Monetary Zone – Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra. With its launch, African countries ready to shift to the platform will be able to hit the ground running. 

E-commerce negotiations

As AfCFTA’s bold journey continues, people abreast of the process say phase three will be vital, as it will focus on e-commerce negotiations. With digitalization becoming a fundamental driver of global trade growth, negotiations on how the single market will integrate it will be crucial.

Kenya has continued to position itself to benefit in a big way once the agreement is fully implemented.

“The Customs system and procedures are currently being reviewed and aligned to accommodate trade under AfCFTA,” says Kavata Mutuku, a representative of the trade facilitation arm at the Customs and Border Control Department, the Kenya Revenue Authority (KRA).

Ms Mutuku adds that KRA approved procurement and subsequent publishing of AfCFTA trading documents. In addition, the taxman is currently sensitizing its staff, the private sector, and other stakeholders through a number of capacity-building programmes to be educated and informed when trading commences.

According to Maurice Mwaniki, an associate director at PwC, an audit and assurance/ advisory and tax services company, access to relevant and timely information regarding the implementation of AfCFTA is an important aspect of enabling businesses to prepare and take advantage of the agreement.

According to Johnson Weru, Kenya’s Trade Principal Secretary, the country is keen to expand its supply capacity and increase its exports of goods and services across Africa and other global markets.

“We transform people by giving opportunities and information on how to access those opportunities and leading by examples. As a government, we came up with the Buy Kenya Build Kenya campaign to promote the consumption of domestic products. AfCFTA is sure to give more opportunities,” he says.