Wednesday, 19 June 2024

In Business

The Future Potential of the AfCFTA for Business Owners in Africa

Business Owners in Africa must become concerned with the African Continental Free Trade Area (AfCFTA), especially how they can explore and benefit from its future.

The African Continental Free Trade Area (AfCFTA) is a free trade agreement among countries in Africa that aims to create a single market for goods and services, and facilitate the movement of business persons and investments across the continent. 

The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs). The overall mandate of the AfCFTA is to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion.

The AfCFTA is one of the flagship projects of Agenda 2063: The Africa We Want, the African Union’s long-term development strategy for transforming the continent into a global powerhouse. The goal of the AfCFTA is to increase trade and investment among African countries, promote economic growth and development, and reduce poverty on the continent.

 

The African Continental Free Trade Area (AfCFTA) is a comprehensive agreement that covers several key areas, including:

Tariff liberalization: This includes the gradual reduction and eventual elimination of tariffs on goods traded among participating countries.

Non-tariff barriers: The agreement aims to reduce and eliminate non-tariff barriers to trade, such as quotas, licensing requirements, and technical barriers to trade.

Services: The agreement covers trade in services, including the movement of natural persons, such as businesspeople and professionals.

Investment: The agreement promotes and protects foreign investment, including provisions for the protection of property rights and the settlement of disputes.

Intellectual property: The agreement includes provisions for the protection of intellectual property rights, including patents, trademarks, and copyrights.

Competition policy: The agreement includes provisions to promote fair competition and prevent anti-competitive practices.

Customs cooperation: The agreement includes provisions to improve customs cooperation and streamline customs procedures to facilitate trade.

Dispute resolution: The agreement includes mechanisms for the settlement of disputes among participating countries.

Capacity building: The agreement includes provisions to support capacity building and technical assistance to help participating countries fully participate in the AfCFTA.

Monitoring and Review: The agreement includes provisions for the regular monitoring and review of the implementation of the agreement to ensure it is achieving its objectives.

As business owners in Africa, large or small, there things we expect from such an agreement made on our behalf by continental legislators, all hoping that our businesses will grow and become more sustainable as we enter the future of yester year business and economics.

The African Continental Free Trade Area (AfCFTA) agreement is expected to bring several benefits to business owners in African countries, including:

Increased market access: The AfCFTA will create a single market for goods and services, providing business owners with access to a larger market of potential customers and suppliers.

Reduced Trade Costs: The agreement aims to reduce and eliminate tariffs and non-tariff barriers, which should lower the cost of doing business and make it easier for companies to trade with other African countries.

Improved Competitiveness: The agreement aims to promote fair competition and prevent anti-competitive practices, which should help businesses to become more competitive and efficient.

Increased investment: The agreement promotes and protects foreign investment, which should help to attract more investment to African countries and support economic growth.

Protection of intellectual property: The agreement includes provisions for the protection of intellectual property rights, which should help to promote innovation and creativity.

Facilitation of trade: The agreement includes provisions to improve customs cooperation and streamline customs procedures, which should make it easier for businesses to trade across borders.

Improved access to services: The agreement covers trade in services, which should help to improve access to services such as transportation, logistics, and financial services.

Capacity building: The agreement includes provisions to support capacity building and technical assistance, which should help African businesses to improve their skills and capabilities to take advantage of the opportunities created by the AfCFTA.

Job and wealth creation: The agreement will help increase intra-African trade which will lead to an increase in jobs and wealth creation across the continent.

A business owner in their right mind, first thinks of how they benefit from any deal or legislation in their country that affects them. We as business owners are asking ourselves the same questions, of how we benefit from the AfCFTA and how can we exploit those benefits, navigating and extracting all possible benefits.

A business owner looking to exploit the African Continental Free Trade Area (AfCFTA) agreement in order to manage their supply chain across countries in Africa can take the following steps:

Identify potential suppliers and customers: The AfCFTA will create a single market for goods and services, providing business owners with access to a larger market of potential suppliers and customers. Business owners should identify potential suppliers and customers in other African countries and develop relationships with them.

Take advantage of reduced tariffs: The agreement aims to reduce and eliminate tariffs on goods traded among participating countries. Business owners should take advantage of this by sourcing inputs and raw materials from other African countries, and exporting finished goods to other countries on the continent.

Take advantage of non-tariff barrier reduction: The agreement aims to reduce and eliminate non-tariff barriers to trade, such as quotas, licensing requirements, and technical barriers to trade. Business owners should review their supply chain processes to identify any potential non-tariff barriers and take steps to eliminate them.

Take advantage of improved customs cooperation: The agreement includes provisions to improve customs cooperation and streamline customs procedures, which should make it easier for businesses to trade across borders. Business owners should familiarize themselves with the improved customs procedures and take advantage of them to manage their supply chain more efficiently.

Look for opportunities in services: The agreement covers trade in services, which should help to improve access to services such as transportation, logistics, and financial services. Business owners should look for opportunities to outsource these services to other African countries to improve their supply chain.

Consider investing in other African countries: The agreement promotes and protects foreign investment, which should help to attract more investment to African countries. Business owners should consider investing in other African countries to expand their supply chain and take advantage of the opportunities created by the AfCFTA.

Take advantage of capacity building: The agreement includes provisions to support capacity building and technical assistance, which should help African businesses to improve their skills and capabilities to take advantage of the opportunities created by the AfCFTA. Business owners should take advantage of this to train their employees and improve their supply chain management skills.

Compliance is always a challenge for business owners anywhere in the world, and Africa is no exception. The AfCFTA comes with many areas that require some form of compliance or the other, and knowing and understanding these will increase the chances of fully adopting and benefiting from the agreement.

There is however a challenge of national laws not being compliant or aligned to the AfCFTA and a business owner cannot fully tap into the agreement as their country, as a member state, would not have adjusted their local laws to ensure maximum benefits for the business owners in that country.

In order for African countries to fully comply and align with the African Continental Free Trade Area (AfCFTA) agreement, several national laws may need to be changed. These include:

Tariff laws: Countries will need to amend their tariff laws to reduce and eventually eliminate tariffs on goods traded among participating countries in accordance with the AfCFTA agreement.

Non-tariff barrier laws: Countries will need to review and amend their laws and regulations related to non-tariff barriers to trade such as quotas, licensing requirements, and technical barriers to trade.

Services laws: Countries will need to review and amend their laws related to services trade to ensure that they are in line with the AfCFTA agreement and that the movement of natural persons is facilitated.

Investment laws: Countries will need to review and amend their laws related to foreign investment to ensure that they are in line with the AfCFTA agreement and that foreign investment is protected and promoted.

Intellectual property laws: Countries will need to review and amend their laws related to intellectual property to ensure that they are in line with the AfCFTA agreement and that intellectual property rights are protected.

Competition laws: Countries will need to review and amend their laws related to competition policy to ensure that they are in line with the AfCFTA agreement and that fair competition is promoted and anti-competitive practices are prevented.

Customs laws: Countries will need to review and amend their laws related to customs cooperation to ensure that they are in line with the AfCFTA agreement and that customs procedures are streamlined to facilitate trade.

Dispute resolution laws: Countries will need to review and amend their laws related to dispute resolution to ensure that they are in line with the AfCFTA agreement and that disputes among countries can be effectively resolved.

It is important to note that the implementation of the AfCFTA agreement will require coordination among different government agencies, and may require the establishment of new institutions to manage the implementation of the agreement.

The African Continental Free Trade Area (AfCFTA) agreement presents a significant opportunity for small business owners in Africa to expand their markets, lower their costs, improve their competitiveness and access to services, and attract more investment. 

It is important for small business owners to stay informed about the developments and implementation of the AfCFTA and take steps to take advantage of the opportunities it presents. 

However, it is also important to note that the full implementation of the AfCFTA will require the efforts of governments, private sector and civil society to ensure that the necessary legal and institutional frameworks are in place, and that capacity building and technical assistance are provided to support small businesses to participate in the AfCFTA. The AfCFTA will bring prosperity and development to the continent, and small business owners should be at the forefront of the opportunities it presents.

In order for the African Continental Free Trade Area (AfCFTA) agreement to be successful in Africa, several industries must be early adopters of the agreement and take steps to take advantage of the opportunities it presents. These industries include:

Manufacturing: The AfCFTA will provide manufacturers with access to a larger market of potential customers and suppliers, and the opportunity to source inputs and raw materials from other African countries at lower costs.

Agriculture: The AfCFTA will provide farmers and agribusinesses with access to a larger market of potential customers, and the opportunity to export their products to other African countries.

Services: The AfCFTA will provide service providers such as transportation, logistics, and financial services with access to a larger market of potential customers and the opportunity to outsource services to other African countries.

Tourism: The AfCFTA will provide the tourism industry with access to a larger market of potential customers, and the opportunity to promote African destinations to tourists from other African countries.

Technology and Innovation: The AfCFTA will provide opportunities for technology companies and innovation hubs across Africa to develop, test, and scale their products and services in new markets, as well as protect their intellectual property rights.

Construction and Infrastructure: The AfCFTA will provide opportunities for companies operating in the construction and infrastructure sectors to work on projects in other African countries, and access to a larger market of potential customers.

It is important to note that these are just some examples of sectors that could benefit from the AfCFTA, other sectors may also benefit from this agreement as well. It is important for business owners to stay informed about the developments and implementation of the AfCFTA, and take steps to take advantage of the opportunities it presents.

The African Continental Free Trade Area (AfCFTA) agreement presents a significant opportunity for small business owners in Africa to expand their markets, lower their costs, improve their competitiveness and access to services, and attract more investment. 

It is important for small business owners to stay informed about the developments and implementation of the AfCFTA and take steps to take advantage of the opportunities it presents. 

However, it is also important to note that the full implementation of the AfCFTA will require the efforts of governments, private sector and civil society to ensure that the necessary legal and institutional frameworks are in place, and that capacity building and technical assistance are provided to support small businesses to participate in the AfCFTA. 

The AfCFTA will bring prosperity and development to the continent, and small business owners should be at the forefront of the opportunities it presents.

Sources: African Union AfCFTA, Behaviour Report

Cabanga Media Group publishes of thoughtful economic and business commentary magazines and online media, in several African markets, that include South Africa, Botswana, East Africa Community, Ethiopia, Egypt, Nigeria, and Zambia.