The CFTA and Opportunities for Kenya
Category:
By: Stephen Jairo,
It is almost four months since the African Continental Free Trade Area, more commonly known as the CFTA or AfCFTA, was signed during the 10th Extraordinary Session of the Executive Council of the African Union held in Kigali, Rwanda. It is important to note that out of the 54 states that make the continent, a whopping 44 states witnessed and supported the coming into force of this agreement, pending ratification by member states. However, there is a requirement that for the CFTA to become operational, it has to be ratified by the parliaments of at least 22 member states.
This said, it is paramount to have a look at what the aims and objectives of the CFTA are to the continent as a whole, but closer home, to the EAC as a regional economic block and to Kenya as a member state.
The overall objectives of the CFTA are as follows:
Create a single continental market for goods and services, with free movement of business persons and investments, thus paving the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.
Expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general.
Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
Enhance competitiveness at the industry and enterprise level through exploiting opportunities for large scale production, continental market access and better reallocation of resources.
These objectives will among other expected positive outcomes lead to creation of jobs thereby helping to alleviate the unemployment scourge prevalent in the continent. In the same vein, free trade within the continent has the repercussion of placing the continent on the world map and thereby endearing it as a business destination and as a result attracting investment in various facets.
Expectations for EAC and Kenya
The African continent as a whole has, and continues to witness growth in trade but with countries out of the continent. This is one of the compelling reasons that is the backbone of this agreement – to spur intra-African trade. For centuries, the countries within the African continent have yearned to have a political economic block akin to the USA. However, competing political interests between the various countries have hampered this noble idea thereby halting any prospects of realizing this goal. It is also important to note that with this initiative facing myriad bottlenecks, various countries embarked in formation of regional blocks to further their interests as individual states and as a grouping an issue that may be single aimed or cut across various goals; political, social, and economic. Some of the regional economic groupings include The Economic Community of West African States (ECOWAS), The East African Community (EAC), The Southern African Development Community (SADC), and The Common Market for Eastern and Southern Africa (COMESA).
To put this into perspective, we note that the combined African population stood at about 1.2 billion as at beginning of 2018, and is growing. For the East African Community (EAC) member states; Kenya, Uganda, Tanzania, Rwanda, Burundi, and South Sudan, the signing of the CFTA is a welcomed move. Collectively, the EAC is home to a population of about 185 million as at 2017, according to data from the World Bank. This translates to a fertile ground for any business oriented initiative as it offers market for diverse products and services.
The EAC can, and should tap into the CFTA as it embodies most of the goals and objectives that are the cornerstone of the regional economic community. Amongst these include having a common external tariff and custom union – these have been implemented and are so far yielding positive returns for traders across the region – even though more still needs to be done and are being undertaken one step at a time. On the same note, amongst the most prominent initiatives to write home about includes the coming into place of the one-stop-border posts. These are aimed at easing cross border transport and custom processes thereby easing the movement of goods and services, as well as people in and out of the EAC member states.
Consequently, noting the endeavours both within individual countries in the EAC and across their borders in terms of improving the levels of infrastructure, the major point to note here is the massive budgetary allocation to infrastructural projects which include roads and rail networks. This is aimed at ensuring there is adequate infrastructure in place that therefore supports the transport of various goods and services across borders, as well as within the individual member states. This will lead to the much desired increase in intra-regional trade which in turn positively impacts intra-African trade, and eventually yield to better livelihoods for the populace.
The CFTA therefore can be said to be a tool that if well implemented, has the ability to among other things, increase cross-border trading system (borderless trading system), enhance accessibility to a larger and wider market base for both goods and services, create job opportunities for women and youth thus enhancing poverty eradication and alleviation strategies, and also allow for the adoption of a free and fair trading environment that is agreeable to all. More importantly, it could herald the onset for the formation of the long thought of United States of Africa with a common goal and agenda for her people.
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The CFTA and Opportunities for Kenya
| Post date: Wed, Aug 1, 2018 |
| Category: |
| By: Stephen Jairo, |
It is almost four months since the African Continental Free Trade Area, more commonly known as the CFTA or AfCFTA, was signed during the 10th Extraordinary Session of the Executive Council of the African Union held in Kigali, Rwanda. It is important to note that out of the 54 states that make the continent, a whopping 44 states witnessed and supported the coming into force of this agreement, pending ratification by member states. However, there is a requirement that for the CFTA to become operational, it has to be ratified by the parliaments of at least 22 member states.
This said, it is paramount to have a look at what the aims and objectives of the CFTA are to the continent as a whole, but closer home, to the EAC as a regional economic block and to Kenya as a member state.
The overall objectives of the CFTA are as follows:
Create a single continental market for goods and services, with free movement of business persons and investments, thus paving the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.
Expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general.
Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
Enhance competitiveness at the industry and enterprise level through exploiting opportunities for large scale production, continental market access and better reallocation of resources.
These objectives will among other expected positive outcomes lead to creation of jobs thereby helping to alleviate the unemployment scourge prevalent in the continent. In the same vein, free trade within the continent has the repercussion of placing the continent on the world map and thereby endearing it as a business destination and as a result attracting investment in various facets.
Expectations for EAC and Kenya
The African continent as a whole has, and continues to witness growth in trade but with countries out of the continent. This is one of the compelling reasons that is the backbone of this agreement – to spur intra-African trade. For centuries, the countries within the African continent have yearned to have a political economic block akin to the USA. However, competing political interests between the various countries have hampered this noble idea thereby halting any prospects of realizing this goal. It is also important to note that with this initiative facing myriad bottlenecks, various countries embarked in formation of regional blocks to further their interests as individual states and as a grouping an issue that may be single aimed or cut across various goals; political, social, and economic. Some of the regional economic groupings include The Economic Community of West African States (ECOWAS), The East African Community (EAC), The Southern African Development Community (SADC), and The Common Market for Eastern and Southern Africa (COMESA).
To put this into perspective, we note that the combined African population stood at about 1.2 billion as at beginning of 2018, and is growing. For the East African Community (EAC) member states; Kenya, Uganda, Tanzania, Rwanda, Burundi, and South Sudan, the signing of the CFTA is a welcomed move. Collectively, the EAC is home to a population of about 185 million as at 2017, according to data from the World Bank. This translates to a fertile ground for any business oriented initiative as it offers market for diverse products and services.
The EAC can, and should tap into the CFTA as it embodies most of the goals and objectives that are the cornerstone of the regional economic community. Amongst these include having a common external tariff and custom union – these have been implemented and are so far yielding positive returns for traders across the region – even though more still needs to be done and are being undertaken one step at a time. On the same note, amongst the most prominent initiatives to write home about includes the coming into place of the one-stop-border posts. These are aimed at easing cross border transport and custom processes thereby easing the movement of goods and services, as well as people in and out of the EAC member states.
Consequently, noting the endeavours both within individual countries in the EAC and across their borders in terms of improving the levels of infrastructure, the major point to note here is the massive budgetary allocation to infrastructural projects which include roads and rail networks. This is aimed at ensuring there is adequate infrastructure in place that therefore supports the transport of various goods and services across borders, as well as within the individual member states. This will lead to the much desired increase in intra-regional trade which in turn positively impacts intra-African trade, and eventually yield to better livelihoods for the populace.
The CFTA therefore can be said to be a tool that if well implemented, has the ability to among other things, increase cross-border trading system (borderless trading system), enhance accessibility to a larger and wider market base for both goods and services, create job opportunities for women and youth thus enhancing poverty eradication and alleviation strategies, and also allow for the adoption of a free and fair trading environment that is agreeable to all. More importantly, it could herald the onset for the formation of the long thought of United States of Africa with a common goal and agenda for her people.
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