What continental free trade plan means for SMEs


An article culled from Business Daily

It is encouraging to hear growing African businesses expressing excitement when they venture into new markets in the region. This has been happening in earnest, but the sweet spot for the thousands of entrepreneurs looking to expand beyond their geographical boundaries lies in the implementation of the Continental Free Trade Area Agreement, (AfCFTA) that was fronted by the African Union last year.

This quest started in January 2012 when the AU agreed to develop the AfCFTA to create a single continental market for goods and services.

Through AfCFTA, the AU hopes to accelerate continental integration and intra-African trade, boost manufacturing and address possible overlaps within the continent’s economic communities. The box of goodies from the AU requires members to review import tariffs, striking off import duty from 90 percent of goods, paving the way for free access to goods and services across the continent.

The population of roughly 1.3 billion people that is expected population growth to hit 1.7 billion by 2030 whets the business appetite.

Africa’s population is the same as China’s and 4 times the US but has a land mass three times the size of both the US and China, therefore a homogenous market will mean more trade opportunities.

A chef from Mali can buy his plantain from Uganda while a designer in Botswana would ship her Kente from Ghana, increasing opportunities for logistics companies and variety of goods for consumers.

We might witness a continent moving into the industrial revolution with all the advantages and scale the fourth industrial revolution offers. The opportunity for digital goods and services for ecommerce, inter-country logistics and payments will be unleashed, enabling, say, a Kenyan software developer to export services from Cape Town to Cairo.

As a show of commitment to building the largest trade bloc globally, the Ethiopian Government has agreed to give AU member citizens visas on arrival.

Egypt is interested in boosting its textile industry if put on a round table with like-minded countries like Madagascar, Lesotho and Tunisia. Morocco is keen on supplying the continent with its agricultural produce as it rallies for climate change initiatives.

I believer that business or trade drives government agenda in their quest for taxes, hence the ripple effect will be that African governments will step up and improve their infrastructure and regulations, improving ease of doing cross-border business.

If the CFTA dream is to be achieved, some challenges need to be addressed such as unevenly distributed populations where some countries will have unfair advantage over others in market sizes and spending ability.

Road and telecoms networks need to be improved while language barriers between Francophone, Anglophone and Arabic speaking nations need to be broken.

And, sensitise African citizens on threats and opportunities.