African Continental Free Trade Area (AfCFTA) agreement, the world’s largest trading bloc has the potential both to boost intra-African trade by 52.3 percent through harmonization, facilitation, and coordination of trade liberalization across Africa, in general, is seeking to benefit SMEs first.
With 1.2 Billion people and a combined GDP of 2.4 Trillion dollars, SMEs will be immediate beneficiaries of the Africa Free trade Area through reduced operating costs and expanded market. Although a huge infrastructure gap and slow implementation of other trade enablers threatens to delay the realization of the full benefit of the open market, the Union says it will go for the low hanging fruits first.
“If we reduce the time for SMEs to cross borders we are giving them a boost. If you are in Kenya producing nice avocados as they do and you want to export them in five countries and each of the five countries have different rules for health requirements for Avocados, its five times the cost for the SME. One health requirement five times savings for the SMEs,” said Arancha Gonzalez
Through the agreement, Africa aims to gradually do away with 90% of the tariffs in five years thereby reducing barriers to trade on the continent. With ratification implementation of other key enablers in the open market including, open skies agreement signed last year are yet to take off
While Intra African trade averages at 13% compared to 59% for Asia and 67% for Europe, Africa is banking on the open market to an agreement to do the long overdue catch-up.