[column] Frans Frida: Positioning Africa MSMEs to tap into and benefit from the AfCFTA
28-10-2022 14:58:00 | by: Marlene Mutimawase | hits: 11012 | Tags:

The African Continental Free Trade Area (AfCFTA) is a continental treaty that seeks to, among other things, eliminate tariff and non-tariff barriers that have hindered intracontinental trade and the movement of people and goods for centuries on the continent.

It further seeks to liberalize trade in services and progressively promote investments, intellectual property rights, and competition policies and foster cooperation on all trade-related areas. As per trade analysts, the AfCFTA will be a game-changer for the continent’s people and their businesses as it will be the largest single market in the world that will combine about 1.3 billion people.

The AfCFTA recognizes the fact that Micro, small and medium-sized enterprises (MSMEs), informal traders, and youth and women business operators play a crucial role in African trade. For Africa MSMEs, the AfCFTA means, an opportunity to conquer new markets, expand their customer base, grow their revenues, and increase their brand visibility. This will translate into more jobs, increased national revenues, and improved living standards in the country. Since the African government signed and ratified the agreement, the ball is in the court for individuals to tap in the opportunities that the agreement encompasses.

 Chance favors the prepared mind

Africans witnessed the first consignment under the AfCFTA two weeks ago, whereby Kenya shipped batteries and tea to Ghana. This is part of a trial phase to ramp up the AfCFTA trade with countries that are ready to take off.  Thus 7 countries involving Kenya, Ghana and six other states: Cameroon, Egypt, Mauritius, Rwanda, Tanzania, and Tunisia form part of the AfCFTA Guided Trade phase.

For all traders from other countries that will soon join the next stage from the trial phase, this is the perfect time to strategize on how to approach trading under the AfCFTA. From my point of view, having a diligent export plan way in advance will save you from ignorance. As a matter of fact, MSMEs can prosper under AfCFTA only if they prepare themselves.

As for where to start, there is a need to identify the sectors that can favour the market prospects and value chain integration, team up with others to explore export opportunities and enhance scale, Seek information, and leverage on social media. In addition, a deeper understanding of the AfCFTA instruments, rules, and regulations will be critical, especially rules of origin and trade facilitation, certification requirements, services regulations, licensing and certification of service suppliers and modalities of liberalization of trade in goods and services is a treasure.

Government Institutional supports

At the national levels, government efforts to create awareness of the AfCFTA can be seen in most African countries through the ministry of trade, UNDP awareness campaigns, and active engagements to draft the AfCFTA national strategic plans, as well as the Ministry of international relations websites and webinars that are updating the residents on the AfCFTA current affairs.

As we wait for some countries to release their national AfCFTA implementation strategy and action plan, here are some of the observations: The scanty provision of vital services to the MSMEs continues to encumber the processes of business development in Africa. Amidst the coming into the trade of the AfCFTA the capability of MSMEs as key contributors to the socio-economic development of Africa remains questionable.

Government institutional support for MSMEs could mean, fair and affordable credit schemes that are apt to alleviate financial constraints on poor individuals and MSMEs. Similarly, granting any other type of support to empowers them with an opportunity to build assets, improve technology and mitigate their vulnerability to external shocks.  Bridging the information gap can be translated into local languages and via the necessary media channels as opposed to the existing form of communication. 

Africans by nature are go-getters and once empowered through the most needed support, their utmost gratification can generally serve as the backbone of economic growth and sustainable development for the country.

 From a policy perspective, complementary measures need to be taken to support women traders and Youth owned MSMEs to ensure a more inclusive trade under the AfCFTA. The ELITES have been trading and are already well established, please give a chance to the MSMEs! Most importantly, special focus should address the challenges faced by women-owned businesses in trading across borders, with a stronger emphasis required on understanding and improving female perceptions of additional and unauthorized charges, customs tariffs, and customs procedures where females are substantively divergent from the neutral score and have more negative perceptions, on average, compared to male-owned firms.

Leveraging Africa Continental Institutions

The African Export and Import bank is one of Africa’s institutions at the forefront of the AfCFTA operations, working closely with the African Union Commission and the AfCFTA Secretariat to support the implementation of the AfCFTA through several strategic initiatives such as  Africa Quality Assurance Centres (AQAC), the Intra-African Trade Fairs, the Pan-African Private Sector Trade, and Investment Committee (PAFTRAC), an advocacy platform to enhance African private sector participation in trade negotiations and investment policy formulation, and the Pan-African Payment and Settlement System (PAPSS), which will facilitate the clearing and settlement of intra-African trade transactions in African currencies as well as the Mansa platform which will bridge lack of trade information in Africa.

As well as the AfCFTA Adjustment Facilities, the Interstate Transit Guarantee offered to facilitate and promote intra-African trade by reducing some of the bottlenecks associated with the movement of goods across borders within Africa. It is, therefore, recommendable that the Government and African MSMEs actively engage at their respective levels.

Frans Frida is a Namibian student at the Pan African University in Cameroon studying towards a Master of Science in Governance and Regional Integration and also a founder of Explore Africa.