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Home Opinion

To reap big from AfCFTA arrangement, Kenya must focus on export market

by The Informer
February 23, 2021
in Opinion
Reading Time: 3min read
To reap big from AfCFTA arrangement, Kenya must focus on export market
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Under the African Continental Free Trade Area (AfCFTA), for the first time, the much awaited intra-African trade is becoming a reality.

Africa is one of the leading and much courted markets globally.

The successful operationalisation of the agreement will create a single continental market for goods and services, including the free movement of persons and investments.

Trading under AfCFTA provides the continent with a rare opportunity to drive the African agenda for a more unified and self-reliant economic bloc.

The agreement is a good foresight that will inject competitiveness, ease of doing business, increase market size and access that remain the top most investment determinants and resultant mutually beneficial job creation to all member states’ economies.

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It is worthwhile to note that globally, AfCTFA is the largest Free Trade Area in the world in terms of the number of participating countries.

Currently, Africa trades with herself marginally at an estimated range estimated of 13 per cent to 15 per cent in comparison to other trading blocs such as the European Union whose level of intra-EU trade is almost 70 per cent.

Commendably, Kenya is the first African Union (AU) member state to ratify the AfCFTA agreement out of the 29 countries that have ratified so far.

The exemplary lead Kenya has accorded the Free Trade Area underscores the country’s commitment to its successful implementation.

Additionally, out of the 55 AU member states, 54 have already signed.

Under AfCTA, it is about time the African governments to turn the tide of the international trade by making the unified continental trade agreement as source of exported goods through value addition rather than a disadvantage market for foreign exports.

Kenya being a regional economic hub, this level of high market integration supported by a 1.3 billion population places the country at a vantage point to take advantage of the new opportunities particularly on the export market of goods and services.

With increasing level of globalisation and ever growing inter-regional trade cooperation within and across continents, a more coordinated implementation strategy amongst AfCFTA member states is critical for successful operationalisation of the agreement.

And to maximise the benefits from the agreement, the quality and competitiveness of the export market products and services should be continuously improved to match the global standards particularly with regard to the four delivery pillars on manufacturing, affordable housing, Universal Health Coverage and food security.

The recent unveiling and commissioning of the inaugural re-purposed Boeing 787 Kenya Airways passenger flight to a cargo aircraft  by Transport, Infrastructure Housing, Urban Development and Public Works Cabinet Secretary James Macharia and his Industrialization, Trade and Enterprise Development counterpart Betty Maina is timely.

This stands to transform Kenya into a competitive export-led economy support by existing infrastructural developments of the Standard Gauge Railway, ongoing rail network rehabilitation, road expansion, last mile electricity connection, ICT backed fintech companies among others.

However, to achieve this, Kenyan business community need supportive sound policies championed by both the government and the private sector mainly on; access to credit lines for capital, address multiple taxation, fees and charges, lowered cost of production, adequate and timely trade networks and market intelligence to have an upper hand to take the lead.

The youth who comprise the largest population in the country majority of whom are unemployed is an untapped resource for both skilled and semi-skilled labour.

Similarly, they also form the bulk of the 7.4million Micro, Small and Medium Enterprises (MSMEs) currently operating in the country who contribute 34 per cent to the Gross Domestic Product (GDP).

Although a previous report by World Bank ranked Kenya position 56 globally on attractiveness to investors on Ease of Doing Business up from position 61 in 2018, the level of investors’ flight being witnessed in the country is worrying to say the least.

The high cost of production attributed to exorbitant electricity charges and taxation are key hindrances for a robust and self-reliant economy. It also serves as a multiplier factor in inhibiting Foreign Direct Investments (FDIs) into the country.

To make this a reality, the private sector must proactively create synergy with the government to have a mutually supportive and aligned agenda in create strategic partnerships, build country reputation and investor confidence, position the country for new FDIs, trade agreements and bilateral commitments.

Africa is well endowed with resources and unlimited supply of human capital to unlock manufacturing, mitigate global supply-chain risks, leverage on integration and regional value chains in order to deepen intra-African trade and unlock production capacity to meet local and global demands.

The successful implementation and operationalization of the Free Trade Area will eventually lead to simplification and harmonization of customs procedures to improve trade within regional supply chains.

The author is a Diplomacy and Communication Consultant

Kinyuru Munuhe

kinyurumkinyuru@gmail.com

The Informer

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