Sluggish start to AfCFTA trading
Local businesses wishing to explore foreign markets and expound trade with peers on the continent under the African Continental Free Trade Area (AfCFTA) will wait a little longer following continued revision of the Malawi tariff book by the authorities.
It has transpired that tariff offers that Malawi submitted to the AfCFTA attracted what officials in the Ministry of Trade have described as ‘comments’ which have necessitated a review of the same, currently underway.
This is happening while some eight countries including Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia, have started trading under the pact, under what is called the Guided Trade Initiative, launched on October 7 2022.
Concluded trades under the initiative include a consignment of coffee from Rwanda and Exide batteries from Kenya, all to Ghana.
Chief technical adviser on the AfCFTA Prudence Sebahizi is quoted in international media as saying the initiative seeks to facilitate commercially meaningful trading among interested AfCFTA state parties that have met the minimum requirements for trade under the agreement.
“This will be achieved through matchmaking businesses and products for export and import between interested State Parties in coordination with their national AfCFTA Implementation Committees.
“The initiative is important in the sense that it will allow us to test the readiness of the private sector to participate in trade under the AfCFTA regime and identify possible future interventions to increase intra-African trade and maximise the benefits of the AfCFTA,” Sebahizi said.
In a WhatsApp response on Sunday, Executive Director of South Africa-based Trade Law Centre (Tralac) Trudi Hartzenberg confirmed that most of the countries that ratified the pact are still working on the tariff lines.
“Guided Trade for eight countries in selected products was launched in October last year, but we are still negotiating tariff concessions, some rules of origin and services commitments,” Hartzenberg said.
Spokesperson in the Ministry of Trade and Industry Mayeso Msokera said the review is expected to be concluded in a few months coming.
“We made an offer and received some comments. So what is happening right now is that the Malawi Revenue Authority is reviewing the offer to polish up in some areas and after that we will submit documents in order to join the guided trade initiative.
“I cannot commit on the exact date but we are pushing MRA to work with speed. It may not take more than two months to conclude the works but, after they are done, we will submit and they (AfCFTA) will also have to review it and once accepted we will join the guided trade initiative,” Msokera said.
Asked whether Malawi is ready to participate in trade at continental level, Executive Director of Trade Clinic Lewis Kulisewa said ‘yes and no’.
He said Malawi is one of the 44 out of 54 African countries that have submitted ratification instruments in readiness for trading and signed additional agreements such as the Protocol on Free Movement of Persons and the Single African Air Transport Market; formulation of a clear national implementation strategy and submission of tariff offers covering liberalisation of 90 percent of tariff lines in the Tariff Handbook.
“This shows that Malawi is working towards readiness to implement the agreement. However, Malawi is a net importer of goods from other countries. There are unanswered questions as to whether we have sufficient industrial production capacity to diversify and grow the export base to achieve import substitution.
“On top of it all are the challenges that this country is facing in terms of energy access, frequent blackouts, forex unavailability, expensive telecommunications, unsupportive infrastructure and unstable policies hindering the development of the country’s productive capacity,” Kulisewa said.
He added that failure to enhance the industrial production capacity makes Malawi’s goods uncompetitive, leading to perpetual trade deficits in the face of cheaper imports.
This will be the largest single market in the world with a combined gross domestic product (GDP) of approximately $3.4 trillion.
It is expected that the AfCFTA will reduce tariffs and non-tariff trade barriers for goods and services and enhance regional competitiveness.
Eventually, this will promote industrial development through diversification and regional value chain development, agricultural growth and food security.
To date, three additional protocols on competition policy, investment and intellectual property have been concluded.