LAGOS – The operational phase of the African Continental Free Trade Area, AfCFTA has been launched, after a day-long summit of Heads of State and Government of the African Union (AU) in the Nigerien capital.
The AfCFTA will be governed by five operational instruments – which are – the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory.
Each one was launched by different Heads of State and Government that included President Cyril Ramaphosa of South Africa, President Abdel Fattah El Sisi of Egypt who is current Chairperson of the AU; Mr. Moussa Faki Makamat, the Chairperson of the African Union Commission; and President Mahamadou Issoufou of Niger, who is the Champion of the AfCFTA.
The launch ceremony included ”a roll call of honour”, at which the 27 countries that have ratified the instruments of the AfCFTA were announced, and those that have signed but not yet ratified were mentioned. A commemorative plaque of the signing was also unveiled.
The AfCFTA agreement was adopted and opened for signature on 21 March 2018 in Kigali. It entered into force on 30 May 2019, thirty days after having received the twenty-second instrument of ratification on 29 April, 2019 in conformity with legal provisions.
The speedy entry into force of the AfCFTA is a source of pride for all of us”, said AU Commission Chairperson Mr. Moussa Faki Mahamat.
He described the free trade agreement as one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063.
Uganda’s Trade Minister, Amelia Kyambadde last week said Uganda was prepared to reap from AfCFTA.
With membership of fifty five (55) countries, the AfCFTA is the second largest trading arrangement after the World Trade Organisation (WTO) with 164 members. The Pan African Free Trade market will have a total market of 1.3 billion people, including a growing middle class and a total GDP of US$2.255 trillion as of 2017.
According to Kyambadde, the AfCFTA framework agreement negotiations will cover Trade in Goods, Trade in Services, Investment, and Trade Related Intellectual Property Rights, Competition Policy the Protocol on the Rules and Procedures on the Settlement of Disputes.
The negotiations will take place in two phases. Phase I which is on-going covers Trade in Goods and Trade in Services, while phase II will cover Investment, Competition and Trade Related Intellectual Property Rights.
How is Uganda benefiting from the AfCFTA?
According to Kyambadde, AfCFTA is a broader market for Uganda. ”Our export performance, in general, has improved over the last three years, rising from US$2.482bn 2016 to US$2.901bn in 2017 and US$3,087bn in 2018 – excluding informal trade. Our exports to Africa account for 51% of total exports in 2017 and 2018; and are on a positive trajectory,” says Kyambadde. The top export destinations for the last three years have been: Kenya, Rwanda, DRC, United Republic of Tanzania, Morocco, Zambia, Ethiopia and South Africa.
The conclusion of the negotiations of the AfCFTA will lead to tariffs reduction for a number of Uganda’s strategic export products to especially African countries such as Coffee, Tea, Tobacco, Cereals, Iron and Steel, Dairy and Dairy products, Sugar and Sugar Confectionary among others.
”Reduction of Non-Tariff Barriers (NTBs) and creation of a mechanism for addressing any remaining NTBs is also a key benefit. These frameworks will certainly lead to further growth of our exports, thus economically benefiting our people that are engaged in the production process,” says Kyambadde.
She adds: ”Overall and in line with the National Trade Policy of Uganda, these negotiated markets are expected to provide preferential market access for Ugandan goods, facilitate the development of trade-related infrastructure for cross-border trade among others.”
”The initiatives are also expected to provide a predictable trade regime amongst Member/Partner States as well as stimulate industrial development through the creation of value chains and facilitate the movement of business persons.”
How it will work
According to the agreed modalities, Member states are to liberalize up to 90 percent of their trade in a period of 5 and 10 years for Non-Least Developed and Least Developed Countries (LDCs) respectively.
Kyambadde said her Ministry, in liaison with the relevant MDAs, is in the process of finalising Uganda’s tariff schedule for submission.
Ghana has been confirmed by the Heads of State and Government as the host of the secretariat of the AfCFTA, having prevailed over six other countries that had also expressed interest in hosting it.