Five countries, namely Ghana, Egypt, Rwanda, Kenya, Cameroon and Mauritius, would, in September, commence trading among themselves under the African Continental Free Trade Area (AfCFTA).
According to the Secretary General of the AfCFTA, Mr. Wamkele Mene, these five countries are those that have put Customs systems in place.
Mr. Mene said that on September 26, the Secretariat would hold a session to demonstrate the movement of goods coming into or leaving Ghana to one of the aforementioned countries.
“There are few countries which have the Customs systems in place. Ghana, Egypt, Rwanda, Kenya, Cameroon, Mauritius. These are some of the countries that have the Custom system in place.
That means in practice goods can come in or leave the country on the basis of AfCFTA rules of origin.
“Next month, in September, here in Accra, we will have a session where we will demonstrate the movement of these goods coming into Ghana or leaving Ghana.
On 26th September, all the things that enable trading to be done will be done. Ghana is ready to trade with Egypt, Cameroon, Rwanda.”
He disclosed this at a crunch meeting involving members of the Secretariat, media owners, managers and senior editors in Accra last Tuesday.
The Secretary General noted that, indeed, not all countries could not start trading among themselves at the same time, however, having a Customs system in place is very vital for commencement of trading.
He said the Secretariat had facilitated negotiations and meetings, and procured documents necessary for the commencement of trade, and said it was up to the governments of the various countries to get their Customs systems in place and commence trading.
“What the Secretariat has to do has been done. We have facilitated the negotiations and meetings. All security documents that are required to trade have been done, including that on tariffs have been done.
It is now up to member states for them to do their part so that trade is commercially meaningful. That means they have to introduce the Customs systems that are required.”
Addressing the media fraternity, Mr. Mene noted that for the AfCFTA to succeed, Africa could not pretend it was a trade area in North America where systems were working.
He said leaders must take additional steps such as ease of payments, trade facilitation, trade corridors, and private sector engagement to supplement the liberalization that they want to see.
Achievements and Challenges
Trade in goods
Mr. Mene noted that this was the aspect they had made the most significant progress. He indicated that out of the 5,000 products that were traded on the Continent, the Secretariat had been able to negotiate for 88% of these goods to be traded across board.
He noted that tariffs and other trade policies of the various countries had been dealt with, and so 88% of such goods could be traded.
Mr. Mene noted that it was encountering challenges liberalising goods such as clothing, textile and automobile. He explained that some countries were apprehensive about opening up their textile industry markets due to the number of employment it created.
“We are facing the same issue with the automotive sector, because there are countries that are advanced in the automotive sector while others are now industrializing their sector,” he said.
He, however, noted that the Secretariat was working around the clock to bring these sectors of the economy on board.
Private sector participation
The Secretary-General said the Secretariat was pulling its weight to ensure that the private sector, especially the small and medium scale industry, saw the benefits of the AfCFTA and took advantage of it.
He said this was because the SME sector, which was made up of women and young people, creates 450 million jobs and contributed over 60% of the continents’ GDP.
“The private sector is the most important sector in the implementation of AfCFTA particularly the small and medium scale enterprises so we have to ensure that the private sector sees the benefit and take advantage.”
$11b for SMEs
Mr. Mene noted that due to the vital role the SMEs could play in the AfCFTA implementation, the Secretariat had mobilised $9 billion for productive capacity in agriculture, value addition in minerals and for small and media scale enterprises.
He said the secretariat has signed an additional $2b MOU with World Food program for small and medium enterprises for food production and value addition to enable Africa to respond to the food insecurity it is facing.
Pan African Payment and Settlement System (PAPSS)
In order to overcome the challenges of currency convertibility and multiplicity of currencies, the Secretary-General said the Secretariat had succeeded in the establishment of the Pan African Payment and Settlement System (PAPSS) for the benefit of trading across regions and countries.
He said this was because there were 42 currencies on the Continent, and if one had to trade with such currencies, the monies had to be converted into other currencies, which came at a high cost.
He said the Continent loses $5 billion in currency convertibility each year, which went a long way to affect trader, hence, the establishment of PAPSS.
Transportation bottlenecks
Mr. Mene pointed out that one of the challenges that would impede the implementation of the trade was transportation.
He noted that the distance between Lagos and Abidjan was 1,080km. He said the goods took about 15-16 days and there were 58 check points along the route. He also cited an example of someone travelling from the Seme Border to Lagos over 100km encountering 55 checkpoints.
He compared this to the Northern Corridor, where someone moving goods from the port of Mombasa to Kampala, over 1,600km distance, was able to do so in just three days, and the cost involved was minimal.
He said this affected business activities and made the traders lose competition. Mr. Mene noted that: “If we want to be competitive as a continent, then we have to address this very difficult challenge of transit through the corridors.”
He said bridging the transit gap was achievable, because those in the Northern Corridor achieved it in less than ten years by deploying soft infrastructure, digital tracking systems, and investment in infrastructure.
Why many Ghanaians have not been employed at the secretariat
Mr. Mene used the briefing to respond to concerns raised by some Ghanaians as to why many Ghanaian citizens are not working at the secretariat since the head office is located in Ghana.
He explained that the Secretariat recruits based on a quota system. He said this system specifies that the number of people that should be employed from every AU country and if a country exceeds this quota, no member of that country can be recruited again unless a quota is reopened.
“So this is the main reason why the number of Ghanaians in the system is controlled. It is not because we don’t want to have more Ghanaians in the system. It is because as an AU organ we have to apply these rules.”
He said there is one type of recruitment known as local recruitment which does not have any quota attached to it. He said this involves the recruitment of driver’s cleaners and other menial jobs.
He, however, noted that this also had to be advertised in the entire AU system, so that the best people could be recruited, and so the Secretariat could not control who was employed.
“I am going into details so that you understand that it is not me who says this is how it should be. It is an entire AU system,” Mr. Mene said.
