AfCFTA: From Ghana to Egypt, 8 countries set to trade under Guided Trade Initiative 

By Jonas Nyabor
Posted on Tuesday, 11 October 2022 14:38

A truck is loaded with bags of tea leaves at a plantation in Nandi Hills, in Kenya's highlands region. REUTERS/Noor Khamis

Ghana, Kenya, Rwanda, Tanzania, Egypt, Mauritius, Cameroon and Tunisia are searching for local products they can trade with one another under AfCFTA’s new Guided Trade Initiative - a first step towards the long awaited intra-continental trade revolution.

The eight countries have kick-started commercial trade to test their operational, legal, and institutional preparedness under the agreement, and to motivate other African countries that are yet to commit.

Before the official launch of the initiative in Accra last week, $77,000 worth of Exide batteries had arrived at the Tema Port in Ghana from Kenya.

Rwandan coffee products had also been sent to Ghana, while Ghana’s Keda Ceramics Limited readied ceramic tiles destined for Cameroon at 20% import tax discount, all under the AfCFTA initiative.

The AfCFTA Guided Trade Initiative has identified 96 products, including tea, coffee, processed meat products, sugar and dried fruits, to be traded among the participating countries.

This is not going to be easy

It is expected that in 2023, the number of products will triple as the participating countries increase.

AfCFTA Secretary-General Wamkele Mene said the initiative demonstrates the continent’s capacity and commitment to achieve intra-African trade in the face of its challenges.

“This is not going to be easy,” he said at the launch of the initiative at an event in Accra.

“There will be disagreements, disillusionments, and economic setbacks but our resolve must not be tested by the challenges ahead, it must be tested by our commitment to uplift millions of Africans out of poverty and to make sure that trade is an instrument of inclusivity and Africa’s prosperity.”

Boosting trade

According to the African Union’s Action Plan for Boosting Intra-Africa Trade, only 10% of trading is done among African countries compared to 60%, 40% and 30% intra-regional trade achieved by Europe, North America and ASEAN, respectively.

Through the AfCFTA framework – one of the AU’s Agenda 2063 flagship projects – analysts believe intra-regional trade could rise to at least 33% in the next decade with a market size of 1.2 billion people and combined GDP of $2.5trn across the 54 member states.

However, the full implementation of AfCFTA has faced many challenges, including lack of commitment by some member states, institutional setbacks and logistical constraints. Indeed, today, a container with tea for export from Kenya to Ghana can still take up to six weeks.

Mene said: “We are not deterred by the challenges that will arise. We are determined to make sure that the AfCFTA becomes a reality.”

“We have to make sure that all of our countries have the institutional structures and program of action to support entrepreneurs to be able to produce and trade. We must also have the logistical support to move the goods from one country to the other,” said Ghana’s trade minister, Alan Kyeremateng.

He added that efforts must be made to get more countries onboard to make the initiative successful. “Eight countries out of 44 that have ratified [the] trading agreement should not satisfy us. It should be possible for all state parties to be involved in the trading,” Kyeremateng said.

This is an opportunity to move away from the business of exporting raw materials to adding value locally and trading it within the continent.

His ministry is working with Benso Oil Palm Plantation towards the export of palm kernel oil to Kenya.

Eliphas Mugendi Barine, Kenya’s High Commissioner to Ghana, applauded the guided trade arrangement as an indication that “Africa really means business”.

“Africa does not have any other choice. This is an opportunity to move away from the business of exporting raw materials to adding value locally and trading it within the continent,” he said.

Private sector participation

AfCFTA champion and ex-Niger president Mahamadou Issoufou, who was also at the conference, announced a $6bn deal between AfCFTA and Equity Group to deepen economic integration in Africa by supporting private businesses operating in the areas of food and agriculture, extractives, manufacturing and logistics, trade and investments, social impact, health and environmental investments, and technology.

“The partnership will, among others, support the creation of 50 million jobs by 2025 and 5 million SMEs will receive loans to scale and grow, utilising tools of the AfCFTA Agreement,” he said.

To address the logistical constraint faced by some member states, AfCFTA has signed a deal with Ghana’s McDan Shipping and McDan Aviation to load and transport goods across member countries.

The companies will make available a cargo plane and sea trade vessels to support the AfCFTA programme.

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