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AfCFTA Agreement Kicks Off Despite Legal Hurdles and Rigid Systems

According to the World Customs Organisation (WCO), inconsistent and obsolete laws and regulations, and resistance to change and lack of transparency in Customs administration operations in most African countries are major challenges to ensuring that the free trade takes off and continues uninterrupted in the operational phase starting this month.

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The new year saw the commencement of the Africa Continental Free Trade Area and its waiting to see how it will pan out.

But according to the World Customs Organisation (WCO), inconsistent and obsolete laws and regulations, and resistance to change and lack of transparency in Customs administration operations in most African countries are major challenges to ensuring that the free trade takes off and continues uninterrupted in the operational phase starting this month.

Some countries, unable to establish clearly the regulatory basis for their modernisation efforts and amending their existing laws or adopting new legal frameworks, may derail efficiency of goods and services in the continent.

In its strategic document entitled “Customs in the 21st Century,” WCO says that Customs modernisation programmes must be part and parcel of all countries to ensure AfCFTA succeeds.

Part of the document reads “Resistance to change can be a major stumbling block and new practices can expose corrupt activities. Consequently, change can be seen as an attack on officials and some countries have laws and regulations which are out-of-date, confusing, and sometimes contradictory.”

Lack of co-operation and connectedness among government agencies has also been cited as a hindrance to intra-Africa trade thus, WCO recommends agencies involved in border management to step in and play their part to boost inter-agency co-operation.

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The CEO of Shippers Council for Eastern Africa and chair of Mombasa Port Charter Gilbert Lagat, says businesses suffer both direct border-related costs, such as expenses related to supplying information and documents to relevant authorities, and indirect costs, such as those arising from procedural delays, lost business opportunities and lack of predictability in regulations.

Recent surveys that calculated these costs showed that they ranged between two and 15 percent of the value of traded goods in developed countries and up to 30 to 42 per cent in production costs in developing countries such as Kenya.

Despite recent reforms, trade-related procedures still remain lengthy, cumbersome and costly an aspect which has negatively impacted intra-region trade.

Implementation of policies and laws by countries within East African Community has failed to unlock borders causing delays such as during the Covid-19 pandemic where trucks carrying essential goods queued for days awaiting clearance.

In Kenya, the rationale for implementing the Single Window System as a result of such weaknesses and seeks to reduce the number of players handling goods before clearance from 27 days to at five to eradicate duty duplication.

The success of the system will also come as a result of government strict enforcement of the 24-hour economy in port operations, shippers paying duties, and employing global best practices.

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AfCFTA

AU Member States Adopt Digital COVID-19 Certificates

The new digital application will assist travelers to comply with Covid-19 travel protocols and share vital information to end double testing across the continent.

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From the month of January, all member states of the African Union (AU) will start using digital Covid-19 certificates as one way of eliminating travel restrictions that were occasioned by the coronavirus pandemic.

The new digital Covid-19 certificates will assist travellers to comply with Covid-19 travel protocols and share vital information to end double testing across the continent.

The application is from Econet Wireless and PanaBios and has been certified by AU and the Africa Centres for Disease Control and Prevention (Africa CDC).

The application will also share information concerning the latest travel restrictions and entry requirements which are applicable to the entire stretch of a passengers’ journey across the African continent.

This new innovation is coming at a time when the African Union is working closely with the African Continental Free Trade Area (AfCFTA) secretariat to reduce the number of non-trade barriers in the wake of implementation of African free trade.

The AU has already sent a notice to all its member states on the digital Covid-19 certificates for the simplified health-related immigration processing for travellers and port officials, to ensure that the African continent continues to control and possibly reduce the spread of the Covid-19 pandemic.

The application powers the Trusted Travel Portal, which contains information about the latest travel restrictions and entry requirements. This is a database of authorised laboratories and vaccination compliance material.

Several African countries are now experiencing a second wave of the COVID-19 pandemic with a surge in cases reported daily. This has led to countries placing strict movement restriction within the countries.

Some African countries have begun assessing different COVID-19 vaccines available so as to commence procurement.

South Africa tops the continents chart of COVID-19 cases with a total of 1.37m positive reported cases so far. Of this number, 1.16m have recovered and sadly, 38,854 people have so far died of COVID-19 related cases.

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AfCFTA postpones launch date, redirects focus to curbing pandemic

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The commencement date for the implementation of the $3.4 trillion Africa continental trade pact has been postponed from July 1 due to the Covid-19 pandemic.

Phase I negotiation meetings to firm up rules and regulations had been scheduled to take place in South Africa this month with Phase II of the negotiations covering investment, competition and intellectual property, were scheduled to be completed by January 2021.

Secretary-General of the Africa Continental Free Trade Area (AfCFTA), Wamkele Mene, says all efforts have been shifted to saving lives and improving health systems on the continent, making it unrealistic for the economic bloc to move as scheduled.

“It is obviously not possible to commence trade as we had intended on July 1 under the current circumstances,” Mene said at a United Nations Conference on Trade and Development (UNCTAD) session on digital and trade policy in Africa this week.

Stephen Karingi, Director of Trade at the UN Economic Commission for Africa, reiterates that there will be a delay to the start date.

Emmanuel Bensah, a policy analyst with the Economic Community of the West African States and the African Union, says the July deadline is still feasible.

“The truth of the matter is that member states have yet to make a formal statement and arrive at a consensus pointing to a postponement,” he said.

Mr Bensah also serves as the Deputy executive director of the AfCFTA Policy Network for Ghana and the diaspora.

“AfCFTA is still on the minds of a lot of people, they want it to happen. It presents an opportunity for countries to do things on their own,” he says.

Another factor affecting implementation the agreement is loss of jobs, which the International Labour Organisation estimates at six million, the bulk of which will be in Africa.

UNCTAD has developed a policy brief outlining a 10-point action plan to ensure the movement of goods during and after the pandemic. The measures cover maritime transport, Customs operations, transit, transparency and legal issues, as well as technology to enhance paperless trade processes.

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Africa’s continental free trade deal: Single market on the horizon?

All but three of Africa’s 55 countries have signed up to create a free trade area that covers more than a billion people

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Africa’s continental free trade deal: Single market on the horizon?
Photo credit: African Union Commission

The African Continental Free Trade Area (AfCFTA) will come into force on May 30, making it the world’s largest free trade agreement by population since 1995’s creation of the World Trade Organization.

The latest two ratifications -Sierra Leone and the Sahrawi Republic, were received by the African Union (AU) on April 29.

All but three of Africa’s 55 countries have signed up, creating a free trade area that covers more than a billion people and a collective GDP of over $2 trillion, and includes most of Africa’s largest economies, including South Africa and Egypt. If hold-outs, Benin, Eritrea, and Nigeria, Africa’s largest economy, join in, that’s a total of 1.2 billion people and $2.3 trillion in GDP.

A mere 17% of African countries’ exports go to other African countries -in comparison with intra-regional trade levels of 59% in Asia and 69% in Europe. That means the continent doesn’t feature much in the way of cross-border value chains.

Once the AfCFTA comes into effect, the signatories will need to drop 90% of their tariffs for imports from other African states. According to the United Nations, this could boost intra-African trade by 52.3% and once countries drop their remaining tariffs, which they will be allowed to maintain for a decade in order to protect key industries, the U.N. says intra-African trade will double.

Nigeria remains the biggest absence in the new trade area -and a large one, too, as the country accounts for a sixth of Africa’s GDP. It originally pulled out of talks because, per President Muhammadu Buhari, the agreement could “undermine local manufacturers and entrepreneurs, or lead to Nigeria becoming a dumping ground for finished goods”. Nigerian manufacturers backed Buhari’s protectionist stance.

Over time, if all goes to plan, the AfCFTA will also lead to new trade agreements with countries outside Africa -but this time with Africa maintaining a united front, much as the European Union does today.

AfCFTA has been a flagship project of the African Union’s “Agenda 2063” development vision for five years. The proposal was approved in 2012 and the members started working on a draft in 2015. In March 2018, the leaders of 44 African countries endorsed the agreement in Rwanda. Participants are reportedly weighing the possibility of using a common currency.

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