President Uhuru Kenyatta was in Kigali yesterday to join other African leaders in sigining a new trade agreement.

The African Continental Free Trade Area, which has been in the works for six years, will bring together 55 countries with a combined population of 1.2 billion and GDP of about Sh344.08 trillion.

The trade pact, which includes Protocol on Trade in Goods, Protocol on Trade in Services and Protocol on Dispute Settlement, is expected to reduce tariff and non-tariff barriers which hamper intra-African trade.

Nigeria and Uganda did not sign the agreement and sought more time.

Signatory states will commit to absolving tariffs on 90 per cent of goods with 10 per cent of “sensitive items” to be phased out after further deliberations. It will also address licensing rules and quotas presented in non-tariff barriers.

“Kenya has already removed tariffs on 37 per cent of total tariffs under the EAC Common External Tariff so Kenya will effectively remove tariffs on about 53 per cent of total tariffs,” Trade PS Chris Kiptoo told the Star.

“The AfCFTA also provides for mechanisms on addressing non tariff barriers which has been a major hindrance to intra-African Trade.”

AfCFTA, which will come into force after it has been signed by either 15 or 22 states – a number that has yet to be agreed on – will need to be ratified by the individual countries through respective domestic processes.

This will lead to a second phase of negotiations which will be held later to cover investment, competition policy and intellectual property.

REPORT FINDINGS

A report by the United Nations Economic Commission for Africa found that although the deal may result in long-term gains for the continent, benefits and costs may not be evenly distributed.

The research states through this trade pact, the continent stands to lose at least $4.1 billion (Sh414.6 billion) in tariff revenue losses, but would create an overall annual welfare gain of $16.1 billion (Sh1.6 trillion) in the long run.

Between 2010 and 2015, fuels represented more than half of Africa’s exports to non-African countries, while manufactured goods made up only 18 per cent to the rest of the world, the report stated.

GLITCHES

International media reported Nigerian President Muhammadu Buhari and his Ugandan counterpart Yoweri Museveni did not attend yesterday’s summit.

This, despite the deal being approved by the countries’ ministers for trade only a week ago.

Although reasons for Museveni’s last-minute cancellation were unclear, according to reports by CNBC, an official statement by the Nigerian foreign ministry stated, “This is to allow more time for input from Nigerian stakeholders.” Critics of the agreement have, however, come forward stating the treaty is more focussed on cutting tariffs rather than considering varying production capabilities of each signatory.

This means Africa’s most industrialised states may be at a greater vantage point as the treaty will allow them to sell their manufactured goods to less developed countries, undermining their industrial development. Kiptoo said Kenya has the capacity to expand exports to the Western African market.

Source: The Star

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.