EABC charts out ways to leverage on the AfCFTA

The African Continental Free Trade Area (AfCFTA) isn’t simply a ‘Free Trade Agreement’; it’s about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.

This was the tone from the discussions of the meeting held on 25 April 2019 in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.

The one-day meeting, organized jointly between the East African Business Council (EABC) and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.

The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.

“Together African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent,” said Andrew Mold, Acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment”.

Nick Nesbitt, Chairman of EABC, emphasized the importance of the continent having a clear vision to put an end to the fragmentation of the internal market. “I really applaud everybody who has involved in creating the AfCFTA because their vision is the one of pan-Africanism. It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc,” he said.

Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks,” he said.

Bagamuhunda highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA. 22 countries have ratified the agreement, which was the minimum number required for it to enter into force.

Panel discussions on the opportunities and challenges for the EAC within the context of the AfCFTA

Led by EABC Chairman, Nick Nesbitt, the panelists thoroughly discussed the opportunities and challenges for the EAC within the context of the AfCFTA. The panelists were Mr. Kenneth Bagamuhunda, Director General Customs & Trade, EAC and Mr. Andrew Mold, Officer in Charge for Eastern Africa, UNECA. The Moderator of the panel discussion was Ms. Novella Nikwigize, News Anchor and Producer, Rwanda TV.

In summary, the following issues were raised during the discussion:

• Given that the EAC has moved in terms of integration the region should reposition to take advantage of the AfCFTA despite the challenges at EAC level and look for leeways in the continental market

• The need to chart out mechanism on how to leverage on the AfCFTA

• Leverage the EAC private sector in AfCFA

• Diversifying intra-EAC trade to boost intra-Africa trade

• Need to address outstanding issues among EAC Partner States

• Strengthening regional value chains to attract local and foreign investors in existing and new innovation sectors

• Instruments and infrastructure are there we need to implement them and highlight remaining issues and challenges in subsectors

• Personal responsibility of private sector members Trust

• The private sector as arbitrator between realities on the ground and policy makers

• An open and optimistic approach towards the AfCFTA

Summary of Key Recommendations

For EAC businesses to optimize on AfCFTA opportunities and overcome challenges presented by the Agreement, the EAC Private Sector have proposed the following recommendations:

• The EAC Partner States at the national and regional level should adequately involve the private sector in the negotiating process of AfCFTA instruments to ensure regional private sector interests are taken on board

• There is a need to leverage the EAC at the AfCFTA level. Take into consideration lessons from at EAC level for purposes of leveraging the AfCFTA

• The private sector should not only look at positioning for the benefits but also how the benefits come by.

• Strengthen the ambition of the AfCFTA over the longer term to consolidate the RECs and realize a continental customs union

• Leverage AfCFTA as a platform for negotiations with the rest of the world: reinforce a coherent African trade policy

• EAC Partner States in collaboration with Private Sector should identify and address existing impediments at national and regional to the full implementation of the AfCFTA

• The EAC Partner States in collaboration with the private sector should enhance capacity building to strengthen its institutions to enable them to discharge new mandates derived from AfCFTA

• The EAC Partner States in collaboration with Private Sector should embark on compressive awareness creation on opportunities and challenges presented by AfCFTA

• The EAC Partner States in collaboration with Private Sector should work together in addressing supply-side constraints to enhance the competitiveness of EAC Producers in the AfCFTA

• Use of existing national and regional business organizational structures to engage with national trade negotiators