What is the AfCFTA?
The African Continental Free Trade Area is probably one of the most ambitious trade pact that will be the world’s largest free trade area that connects almost 1.3bn people across 54 African countries.
The agreement aims to create a single market for goods and/or services in order to deepen the economic integration of Africa. The trade area could have a combined gross domestic product(GDP) of about $3.4 trillion, but achieving its full potential depends on significant policy reforms and trade facilitation measures across African signatory nations.
The AfCFTA aims to reduce tariffs among members and covers policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade.
The agreement was brokered by the African Union (AU) and was signed by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. The only country still not to sign the agreement is Eritrea, which has a largely closed economy.
As of 10 February 2022, 41 of the 54 signatories had deposited their instruments of ratification with the chair of the African Union Commission, making them state parties to the agreement.
The Implementation and Benefits of the AfCFTA
Creating a Single Market. The main objective is to create a single market for goods and services to increase trading among African nations. The AfCFTA is tasked to implement protocols to eliminate trade barriers and cooperate with member states on investment and competition policies, intellectual property rights, settlement of disputes and other trade-liberating strategies.
Expected Economic Boost and Trade Diversity. It is estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources.
Collaborative Structure and Enforcement. All decisions of the AfCFTA institutions are reached by a simple majority vote. There are several key AfCFTA institutions. The AU Assembly provides oversight, guidance and interpretations of the Agreement. The Council of Ministers is designated by state parties and report to the Assembly. The Council makes the decisions that pertain to the Agreement. The Committee of Senior Trade Officials implements the decisions of the Council and monitors the development of the provisions of the AfCFTA. The Secretariat is established as an autonomous institution whose roles and responsibilities are determined by the Council.
Eliminating Tariffs promoting trade . State parties will progressively eliminate import duties and apply preferential tariffs to imports from other state parties. If state parties are a part of regional trade arrangements that have preferential tariffs already in place, state parties must maintain and improve on them.
Settling Trade Disputes. Multilateral trading systems can bring about disputes when a state party implements a trade policy that another state party considers a breach of the Agreement. The AfCFTA has the Dispute Settlement Mechanism in place for such occasions which offers mediated consultations between disputing parties. The mechanism is only available to state parties, not private enterprises.
Protecting Women Traders. According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Informal trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.
Growing Small and Medium-Sized Businesses. The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses. Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
Encouraging Industrialization. The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
Contributing to Sustainable Growth. The United Nations 2030 Agenda for Sustainable Development includes goals that the AfCFTA contributes to. For example, Goal 8 of the Agenda is decent work and economic growth and Goal 9 is the promotion of industry. The AfCFTA initiative also contributes to Goal 17 of the Agenda as it reduces the continent’s reliance on external resources, encouraging independent financing and development.
What countries are in AfCFTA
As at May 2022, 43 of the 54 signatories (80%) had deposited their instruments of AfCFTA ratification (ordered by date):
Ghana, Kenya, Rwanda, Niger, Chad, Eswatini, Guinea, Côte d’Ivoire, Mali, Namibia, South Africa, Congo, Rep., Djibouti, Mauritania, Uganda, Senegal, Togo, Egypt, Ethiopia, Gambia, Sahrawi Arab Democratic Rep., Sierra Leone, Zimbabwe, Burkina Faso, São Tomé & Príncipe, Equatorial Guinea, Gabon, Mauritius, Central African Rep., Angola, Lesotho, Tunisia, Cameroon, Nigeria, Malawi, Zambia, Algeria, Burundi, Seychelles, Tanzania and Cabo Verde.
What is AGOA?
AGOA, a U.S.A. trade preference act, was enacted on May 18, 2000, as Public Law 106 of the 200th Congress. On June 29, 2015, U.S.A. President Barack Obama signed the AGOA Trade Preferences Extension Act into law, extending the AGOA legislation by a further 10 years to 2025. The legislation significantly enhances market access to the U.S.A. for qualifying sub-Saharan African countries. AGOA builds on existing U.S.A. trade programs by expanding the dutyfree benefits previously available only under the Generalized System of Preferences (GSP) program, designed to promote economic growth in developing countries. AGOA, combined with GSP, provides duty-free access to the U.S.A. for approximately 6,400 tariff lines.
Kenya AGOA Country and Product Eligibility
Kenya was among the first sub-Saharan African countries to qualify for trade preferences under AGOA. Since October 2000, AGOA exports from Kenya have gradually increased, and today, Kenya is the leading apparel exporter from sub-Saharan Africa to the U.S. market under AGOA. With the extension of the AGOA legislation until 2025, Kenyan exporters have the opportunity to further expand manufacturing and production and to diversify exports to the U.S.A. Some of the benefits Kenya receives under AGOA eligibility are:
• Duty-free treatment for eligible origin products including apparel articles made in Kenya;
• Permission to use third-country fabric under the Special Rule for Apparel; and
• The ability to cumulate product value across AGOA-eligible countries.
For more information about AGOA eligible products see: https://agoa.info/about-agoa/product-eligibility.html and https:// agoa.info/about-agoa/products.html
Why Source from Kenya
- AGOA’s duty-free savings
- Good port access and transport links
- Stable government supportive of private sector
- Open financial system and easy access to capital
- Vibrant private sector
- A top investment destination in Africa
- Incentives from Export Processing Zones and New Special Economic Zones Law
- Educated workforce
- Competitive labour and power cuts
- Ease of doing business
Why the USA Market
- AGOA’s duty-free benefits
- Largest consumer market in world
- Market diversity: given size of market, only small/regional business capture is needed
- Many niche markets to absorb new products
- Multiple distribution channels
- Transparent regulatory requirements
- Strong online/direct-to-consumer market
- Perception of Africa as new frontier for business in certain sectors
- Ease of communication
- Openness of U.S.A. Consumers to goods made outside the U.S.A.
- Introduction of direct flights to USA from
- Kenya towards end of the year
- Quality products which meet international standards as Kenya has been exporting to EU and U.S.A. who set stringent phytosanitary and sanitary standards
- Complies to Corporate Social Responsibility in production systems
U.S.A. Buyers and Brands Sourcing from Kenya
Read more: AGOA 101 Toolkit
21 African States, 586 Million People, Largest Market for Trade & Investment
The Common Market for Eastern and Southern Africa (COMESA) comprises 21 African Member States that came together with the aim of promoting regional integration through trade and the development of natural and human resources for the mutual benefit of all people in the region.
COMESA was initially established in 1981 as the Preferential Trade Area for Eastern and Southern Africa (PTA), within the framework of the Organization of African Unity’s (OAU) Lagos Plan of Action and the Final Act of Lagos. The PTA transformed into COMESA in 1994.The PTA was established to take advantage of a larger market size, to share the region’s common heritage and destiny and to allow for greater social and economic co-operation. COMESA is one of the eight Regional Economic Communities (RECs) recognized by the African Union.
The objectives of COMESA
Among other things, COMESA Member States have agreed on the following:
a) The need to create and maintain: full free trade area guaranteeing the free movement of goods and services produced within COMESA and the removal of all tariffs and non-tariff barriers;
b) A customs union under which goods and services imported from non-COMESA countries will attract an agreed single tariff (Common External Tariff) in all COMESA Member States;
c) Free movement of capital and investment supported by the adoption of a common investment area so as to create a more favourable investment climate for the COMESA region.
What COMESA Offers
COMESA offers its members and partners a wide range of benefits which include:
1. A wider, harmonised and more competitive market
2. Greater industrial productivity and competitiveness
3. Increased agricultural production and food security
4. A more rational exploitation of natural resources
5. More harmonised monetary, banking and financial policies
6. More reliable transport and communications infrastructure
COMESA Priority Areas
A Free Trade Area
The FTA was achieved on 31st October, 2000 when nine of the member States namely Djibouti, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe eliminated their tariffs on COMESA originating products, in accordance with the tariff reduction schedule adopted in 1992.This followed a trade liberalisation programme that commenced in 1984 on reduction and eventual elimination of tariff and non-tariff barriers to intra- regional trade. Burundi and Rwanda joined the FTA on 1st January 2004. These eleven FTA members have not only eliminated customs tariffs but are working on the eventual elimination of quantitative restrictions and other non-tariff barriers.
A Customs Union maybe defined as a merger of two or more customs territories into a single customs territory, in which customs duties and other measures that restrict trade are eliminated for substantially all trade between the merged territories. The territories, in turn apply the same duties and measures in their trade with third parties. In preparation for a Customs Union the Eleventh Meeting of the Council of Ministers held in Cairo, Egypt adopted a Road Map that outlined programmes and activities whose implementation was necessary before the launching of the Union.
Other objectives which will be met to assist in the achievement of trade promotion include:
1. Trade liberalisation and Customs co-operation, including the introduction of a unified computerised Customs network across the region.
2. Improving the administration of Transport and communications to ease the movement of goods services and people between the countries.
3. Creating an enabling environment and legal framework which will encourage the growth of the private sector, the establishment of a secure investment environment, and the adoption of common sets of standards.
4. The harmonisation of macro-economic and monetary policies throughout the region.
COMESA Rules of Origin
The COMESA Rules of Origin are used to determine whether goods produced in the COMESA region are eligible for preferential treatment within the FTA. The COMESA Rules of Origin have five criteria and Goods are considered as originating if they meet any of the following five criteria:
a) The goods should be wholly produced;
b) The CIF value of any non-originating material should not exceed 60% of the ex- work price of the goods;
c) Goods must attain the value added of at least 35% of the ex-factory cost of the goods;
d) Goods should fulfill the CTH rule; and
e) Good must have importance to the economic development of the member states and should contain not less than 25% of value added.
A block with 300 million citizens, land area of 4.8 million square kilometres and a combined Gross Domestic Product of US$ 240 billion.
The East African Community (EAC) is a regional intergovernmental organisation of 7 Partner States: The Democratic Republic of the Congo, the Republics of Burundi, Kenya, Rwanda, South Sudan, Uganda, and the United Republic of Tanzania, with its headquarters in Arusha, Tanzania.
The EAC is home to an estimated 300 million citizens, of which over 22% is urban population. With a land area of 4.8 million square kilometres and a combined Gross Domestic Product of US$ 240 billion (EAC Statistics for 2019), its realisation bears great strategic and geopolitical significance and prospects for the renewed and reinvigorated EAC.
The work of the EAC is guided by its Treaty which established the Community. It was signed on 30 November 1999 and entered into force on 7 July 2000 following its ratification by the original three Partner States - Kenya, Tanzania and Uganda. The Republic of Rwanda and the Republic of Burundi acceded to the EAC Treaty on 18 June 2007 and became full Members of the Community with effect from 1 July 2007, while the Republic of South Sudan acceded to the Treaty on 15 April 2016 and become a full Member on 15 August 2016. The Community's newest member, the Democratic Republic of the Congo acceded to the EAC Treaty on 8 April, 2022.
As one of the fastest growing regional economic blocs in the world, the EAC is widening and deepening co-operation among the Partner States in various key spheres for their mutual benefit. These spheres include political, economic and social.
Opportunities at EAC
At present, more than 400 people are working for the various EAC Organs and Institutions in the 5 Partner States. While recruiting, the EAC seeks to secure the highest standards of efficiency, technical competence, professionalism and integrity.
The EAC frequently engages experts under individual contracts to work on short-term projects as an individual consultant or a consortium. The location of assignments may be at the various EAC Organs or Institutions around the EAC Partner States.
The EAC is committed to finding suppliers and external collaborators with the appropriate professional standing and who share the Community’s values.
The selection of reliable partners is key to the value creation for stakeholders in order to ensure innovation, continuous improvement and to protect the integrity and reputation of EAC.
Key EAC Dates
1967: EAC first established
1977: EAC dissolved
30 November 1993:
Signing of Agreement for the Establishment of the Permanent Tripartite Commission for East African Co-operation
14 March 1996:
Secretariat of the Permanent Tripartite Commission launched, full co-operation operations begin
30 November 1999:
Treaty for the Establishment of the East African Community signed
7 July 2000:
Treaty for the Establishment of the East African Community enters into force
18 June 2007:
The Republic of Rwanda and the Republic of Burundi accede to the EAC Treaty
1 July 2007:
Rwanda and Burundi become full members of the EAC
20 November 2009:
Protocol for the Establishment of the EAC Common Market signed
30 November 2013:
Protocol for the Establishment of the EAC Monetary Union signed
15 April 2016
The Republic of South Sudan accedes to the EAC Treaty
5 September 2016
The Republic of South Sudan becomes a full member of the EAC
20 May 2017
EAC Heads of State adopt the Political Confederation as a transitional model of the East African Political Federation.
8 April 2022
The Democratic Republic of the Congo accedes to the EAC Treaty
Read More: EAC E-Resources