Op-ed- #AfCFTA Postponement: More Time to Prepare
By Sitshengisiwe Ndlovu
The postponement of the Africa Continent Free Trade Agreement (AfCFTA) to sometime next year gives the member states time to visit the national implementation strategies for integrated trade to take off smoothly when the time comes. It is important to mention that the benefits will not be overnight while the implementation will take between 10 to 15 years.
The AfCFTA has been criticised as an ambitious project with a very little chance to succeed.
However, what has been achieved reflects a huge milestone that has been a challenge to the rest of the world. Some agreements have taken over 30 years to conclude due to the domino theory that is associated with free trade agreements(FTAs).
Evidence suggests that currently there are over 302 FTAs that mushroomed in response to the NAFTA (North America Free Trade Agreement), as countries regrouped to satisfy the need to be included.
In Africa, AfCFTA defied the domino theory due to the fact that it was established on the existing Regional Trade Agreements, taking a record three years to conclude!
The success of the AfCFTA will largely be determined by its implementation by member states.
Liberalisation of tariffs and the design of the rules of origin, are the critical areas that require the countries’ focus at national level before trade can begin.
Industrialisation is guided by trade liberalisation set to increase regional intra Africa trade through opened borders and reduced tariffs.
Tariff liberalisation will result in tariff revenue losses. In addition, due to the heterogeneity of African countries, the impact of the revenue losses will not be the same across countries. In the short term some countries may experience more economic shocks than others.
However, empirical evidence shows that in the long run welfare gains by overall countries will exceed the tariff revenue losses.
As part of preparations, member countries are expected to compile tariff schedules that are divided into three categories. A schedule of 90 percent general goods traded in the AfCFTA must be liberalised within 10 years, followed by 7 percent classified as sensitive and 3 percent listed as excluded therefore closed to liberalisation.
This is at a national level function guided by the various stakeholders and has room for further negotiating although the AfCFTA has cautioned countries about the temptation to over protect through tariffs as it would defeat the spirit regional intra-trade.
It is important to also note that countries have been divided into LDC and non-LDC countries.
Non-LCD countries have been given up to 10 years to liberalise the tariffs on goods, while LCD countries have been given a period of up to five years.
The determining distinguishing factor has been the level of critical infrastructure among a host of other trade related infrastructure as negotiated by the member countries. Zimbabwe is a non-LDC country and has up to 10 years to liberalise.
Rules of Origin
Simply put, in a trade agreement, in order for countries to benefit from the advantages offered by the trade agreement , a Zimbabwean exporter must prove that the product it is selling is actually from or has been manufactured or processed sufficiently in Zimbabwe subject to agreed legal terms and conditions.
Rules of origin therefore encourage industrialisation characterised by expanded value chains accompanied by job creation in countries.
Furthermore, industrialisation in the country promotes sector specific policies that further targets value addition as an export competitive strategy.
The certificate of origin becomes the document or the passport that certifies the nationality of the goods so as to enable preferential treatment of the goods into the importing country.
Rules of origin by their nature are complex and may be easily constitute non-tariff barriers.
AfCFTA encourages countries to design rules of origin that are simple so as to facilitate trade and not impede it. Intra-Africa seamless trade within the AfCFTA will rely heavily on the AfCFTA certificate of origin.
When countries are designing rules of origin, the inherent risk is the influence from parties with vested interest, that may result in rules of origin that may be opaque and counter-productive to the detriment of the country.
Companies are encouraged to uphold integrity and avoid compromising local content requirements as this will have a serious negative impact on the value chain.
AfCFTA has developed documents templates based on existing documents within the regions, these are certificates of origin, suppliers and producers declaration. Member states are expected to distribute these documents within the AfCFTA community, ensuring they are accessible to the business community for familiarisation as well.
MSMEs and the informal sector as drivers of economies in African countries are to be frontliners in assimilating trade information on local content.
The Regional Economic Communities especially Comesa has put in the Simplified Trade Regime to ensure MSMEs and small traders’ goods may enjoy preferential treatment of their goods. The AfCFTA has put in place the STR as well.
However, the long term survival strategy is for these powerful entities (MSMEs) to be part of the main stream economy by registering for preferential treatment with the relevant authorities such that when AfCFTA operationalises, these organisations will be competitive within Africa and in overseas markets as well.
In a period where the international world is increasingly becoming mercantile and unilateral, Africa is set to lead the way back to globalisation.
The US-China tariff trade wars and Brexit have threatened international trade and globalisation.
AfCFTA revives the hope that multi lateralism with the right support will resuscitate economies through the creation of US$2,5 trillion market.
Zimbabwe is one of the first 23 countries that ratified the AfCFTA.
Zimbabwe has relatively the best trade-related infrastructure in Africa and the political will that can conquer the AfCFTA market, notwithstanding the effects of the Covid-19 pandemic, it can be done.
* Sitshengisiwe Ndlovu: MBA/UNCTAD: Trade and Gender Linkages/ IAC Dip/Cert: Trade in Services and SDGs: Robert Schuman Centre of Advanced Studies/IDEPCert: Making the African Continental Free Trade Agreement Work. She writes in her personal capacity and she may be reached on email address: