Jun 28, 2022

Mawazo Writing Africa

Writing about the main

AfCFTA: Border hurdles dampen free trade deal expectations

African traders and companies face challenges doing business across borders despite the opening of a $1.2 billion market in January 2021.

The latest study by the United Nations Economic Commission for Africa (UNECA) on select African countries show things are not working on the ground after the African Continental Free Trade Agreement (AfCFTA) came into effect on January 1 last year.

The survey was conducted in A survey conducted in seven countries – Angola, Côte d’Ivory Coast, Gabon, Kenya, Namibia, Nigeria and South Africa – shows that companies have a neutral to slightly negative perception of the investment and trade environment across Africa.

The AfCFTA Country Business Index survey launched in 2018 shows that private sector perceptions of trade in goods are negative, suggesting more needs to be done to remove tariff and non-tariff barriers.

According to of the survey, companies in the sample countries have negative perceptions of unauthenticated fees, customs procedures and additional fees.

“This finding suggests that trade policy measures need to be taken at national and continental levels to address tariff and non-tariff remove trade barriers. Such measures could be implemented through the effective implementation of the zone in line with private sector expectations,” the survey said perceive power.

Strategic interests

The April 2022 report argues that in order for the private sector to fully benefit from the AfCFTA, companies need to be assisted in identifying strategic interests and market opportunities .

According to the survey, small and medium-sized enterprises (SMEs) have a more positive perception of the Continental Free Trade Area than large companies, but are more concerned about tariffs, which they say are the main obstacle to trade.

Respondents say attention should be paid to tackling unauthorized fees and other trading fees, which are considered the most restrictive for trade.

“Businesses appear to have the most positive perceptions of sanitary and phytosanitary measures and technical barriers to trade,” says one survey.

Local businesses want based their perceptions of the key challenges affecting trade and investment on the national implementation of the AfCFTA.

Different perceptions

In companies from Namibia, Nigeria and South Africa reported one relatively positive perceptions of awareness and use of FTAs ​​compared to other dimensions, but companies in Angola, Côte d’Ivoire and Gabon reported more positive perceptions of the commercial environment.

< p>According to the survey, compliance with the Rules of Origin (ROO) requirements are the most restrictive aspect of a free trade agreement, which can be explained in part by the difficulty of complying with the rules , especially for informal traders and women. own companies.

The survey finds that companies have a relatively neutral perception of the general policy regulations on services, investment, intellectual property rights and competition.

While the survey found that most SMEs in Africa are women-owned , these companies are disproportionately affected when investing and trading across African borders.

Women-owned companies in particular are more affected by tariff and non-tariff barriers.

< p>The AfCFTA, which brings together 55 countries with a combined gross domestic product of US$3 trillion, was signed in Kigali on March 21, 2018.

Under the agreement, 90 percent of goods from an exporting country must be shipped within from the free trade area would be subject to preferential treatment (zero import tariffs), with forecasts that the pact could boost intra-African trade by 33 percent.

UNECA esp ts that the AfCFTA could help boost spending by African consumers and businesses combined to US$6.7 trillion by 2030, up from US$2.7 trillion in 2015.

It it is also argued that the AfCFTA has the potential to accelerate industrial development, expand economic diversification and facilitate quality job creation across Africa.

Under the agreement, trade liberalization i s will be enhanced by regional trading blocs – the East African Community, the Common Market for East and Southern Africa, the Southern Africa Development Community and the Economic Community of West African States – which operate separate customs unions.