In the past two weeks, Kenya has taken advantage of a pilot program by the Africa Continental Free Trade Area which aims to facilitate and increase trade across Africa.
The East African country shipped its first batches of locally made car batteries and tea to Ghana, 21 months after the AfCFTA pact was launched. The countries are among eight taking part in this trial phase.
Associated Battery Manufacturers Limited in Nairobi exported its first locally made batteries to Ghana a few weeks ago.
Finance manager Nixon Paloma said the company, which specializes in automotive and solar batteries, had been trading with other East and Southern Africa regional blocs, but this is the first trade with the West African region.
“As you know, one reason why Africa has not been trading with itself is [due to] logistical problems, tariff problems, non-tariff barriers, as well,” Paloma said. “So, the secretariat has come up with rules and regulations to encourage manufacturers in Africa to trade with other African countries. That’s what we took advantage of.”
Paloma said that getting preferential tariff rates is one of the main benefits of trading under this pilot phase.
“For now, for example in Ghana, we are supposed to get 2 percent every year. So, the duty will be lowered at the rate of 2 percent each year until it goes to zero. So, in 10 years’ time, we will be exporting goods to Ghana without any tariffs,” Paloma said.
Ghana’s high commissioner to Kenya, Damptey Bediako Asare, told VOA the trial phase that started in July is a significant step toward implementation of the AfCFTA.
“Most of the time we have African countries coming out with a lot of flagship programs and projects, but they remain on the shelves because we are waiting for everyone to get ready before we roll it out,” he said. “Some of us believe right from the beginning, ‘Why don’t we put together countries that are ready to start trading under the CFTA so that they form a nucleus family of countries that … are ready to implement the CFTA?’ And I think that’s exactly what happened.”
Asare highlighted tariff reduction as a direct benefit under the new pan-African deal.
“We have a lot of African countries that are landlocked,” he said. “So, if you are going to be participating in [the AfCFTA], how are they going to participate in this exercise of trading among ourselves meaningfully? We need to improve infrastructure.”
Kwame Owino, chief executive officer of the Institute of Economic Affairs, a think-tank based in Kenya, told VOA that rather than a free-trade agreement, it’s important to note that AfCFTA is more of a guided-trade agreement.
“Because if it was a free-trade agreement, it would be unilateral. Simply say look, provided you are an African country, a member of the AU or having signed this and this treaty, or ratified it, then you should send whatever goods meeting this quality and this classification into a country regardless of any other conditions,” Owino said.
This first step of allowing AfCFTA countries to trade is a good one, Asare said. He said apart from the economic benefits, nothing comes close to enhancing integration more than when countries start to trade among each other.
Source: Voice of America