Strategy to boost African trade unveiled
By Bernadette Murgor
Kenyan farmers and agribusiness stakeholders across the value chain can now to take advantage of the trial phase of a continental market. This follows the launch of the National AfCFTA Implementation Strategy, and the unveiling of the National Implementation Committee recently.
The strategy sets the rules and guidelines of engagement within the ambits of the AfCFTA (African Continental Free Trade Area) agreement. “It’s instrumental towards the commencement of commercially meaningful trading in goods and services, while the unveiling of the AfCFTA National Implementation Committee will be critical in steering Kenya’s trading within the market,” said Ms Betty Maina, the Cabinet Secretary for Industrialization, Trade and Enterprise Development.
She spoke recently during the launch in Nairobi.
The free trade area covers most of Africa. It was established in 2018 and signed by 43 countries and another 11 signatories.
According to the experts, this trade agreement, once implemented fully, will become the largest in the world.
It is a key milestone in Africa’s trade agenda and has enabled the continent to create a single market with an expected population of 1.2 to 1.3 billion people and a combined GDP of over $3.4 trillion.
The agreement stresses the need for the reduction of tariffs and non-tariff barriers, and the facilitation of free movement of people and labour, right of residence, right of establishment, and investment.
It is critical for Kenya’s trade expansion into other yet untapped African markets and is expected to be a major game changer, as an engine of growth. It is going to boost opportunities for industrial diversification, investment, and job creation, and forge deeper relations with other African countries.
“Implementation of the AfCFTA has the potential to unlock market access for Kenya’s goods and services within the continent, while creating numerous job opportunities across multiple sectors and industries,” she added.
For the agricultural sector, it presents huge opportunities for exporting and importing produce and its value-added products.
The items for trading include coffee, tea, vegetables and pulses, floriculture, fruits and nuts, sisal fibre and other fibre products. Others are khat (miraa), pyrethrum extract, gum Arabic, orphan crops, cotton, tobacco leaves, live animals, germ plasm, and fish.
Under the strategy, there are rules and guidelines on how to trade within this vast and great market. State parties have been encouraged to develop integrated strategies, policies, and institutional frameworks at the national and regional levels to be able to trade.
According to Ms Maina, although the beginning of trading was in January 2021, commercially meaningful trade had been delayed. This was due to delays in the conclusion and submission of tariff offers by state parties and the Covid-19 pandemic that had hampered the conclusion of negotiations.
Therefore, to commence trading, the AfCFTA Initiative on Guided Trade was formulated and endorsed by the 9th Meeting of the Council of Ministers responsible for Trade in Accra, Ghana, in July.
“The initiative is made up of State Parties that are willing and ready to trade amongst themselves and have met the minimum threshold for the start of commercially meaningful trade,” she told the meeting.
Kenya is among the pilot countries in the AfCFTA Initiative on Guided Trade and has already established an ad hoc committee to oversee coordination of the initiative, identifying export products, and facilitating product market access.
“I encourage the private sector, including MSMEs, to work with my ministry to ensure that Kenya makes meaningful gains from trading in products where we have a competitive edge,” she added.
According to Dr Stephen Karingi, director, Regional Integration and Trade Division UNECA, Kenya’s National AfCFTA Implementation Strategy leverages the opportunities available within the framework of deeper trade and economic integration at the continental level.
“All the stakeholders, including the various private sector groups and business community, must appreciate and own the strategy for them to partner with the government for its implementation and benefit,” he added.
Already, Africa is Kenya’s main market, leading by 42 per cent of its share of exports in 2020, and surpassing the traditional European and Asian markets in previous decades.
“Yet, there is still a lot more of the continent that until now, Kenya has not had the opportunity to access. This, therefore, rationalises the vision for this National AfCFTA Implementation Strategy for Kenya to be the leading trade and investment hub in the AfCFTA region,” Dr Karingi said.
The AfCFTA should enhance the participation of African countries in the global trade whose share of trade, despite its significance, remains very low at single-digit figures of three per cent.
CS Maina added: “In addition, the share of intra-African trade is severely limited at 18 per cent.”
Effective participation by Africa in the global value chains will require strong regional value chains and this is the opportunity offered by the AfCFTA, Dr Kiringi explained.
The UNECA (United Nations Economic Commission for Africa) supported the developing, reviewing, publishing, and launching of the Kenya National AfCFTA Implementation Strategy.
“The ECA is privileged to partner with the Kenya Government in implementing measures that will foster increased and efficient trade amongst African countries under the AfCFTA and the negotiation agenda,” Dr Kiringi said.
The United Nations, “ECA views the AfCFTA as a vehicle for achieving the UN 2030 Agenda, in particular; decent work and economic growth (Goal 8), promotion of industry (Goal 9), food security (Goal 2), affordable access to health services (Goal 3), and better finance its own development by reducing reliance on external resources (Goal 17)”.
Objectives of the strategy
This new strategy seeks to increase GDP, overall exports, and Kenya’s exports to all the African sub-regions; increase production and consumption of locally produced goods and services, increase the size and scope of the manufacturing sector and other value-added exports. It is also meant to develop and strengthen regional value chains; boost Kenyan exports to Africa outside of the EAC and Comesa-Free Trade Agreement (FTA); and boost trade in services exports.
Priorities in the strategy
It identifies priority export products and sectors for both goods and services, which include agriculture; livestock and fisheries; manufacturing; handicrafts; mining; and oil and gas.
Priority export sectors under services trade include business and professional services such as tourism; education; health; financial services; ICT; cultural and sports services; and transport and logistics.