By Chisengele Chibuta – PMRC Researcher
The African Continental Free Trade Area (AfCFTA) is a flagship project of the African Union’s Agenda 2063, which is a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. The AfCFTA aims to boost Intra-African trade by providing a comprehensive and mutually beneficial trade agreements among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy. The private sector will play a pivotal role in boosting intra-African trade through the AfCFTA.
According to the Trade Law Centre, in Africa, the private sector accounts for 80% of total production, 66% of investment, 75% of credit and employs 90% of the working-age population. In addition, 90% of the firms within the African private sector are Small and Medium Enterprises (SMEs). This is also the case for Zambia where Micro, Small and Medium-sized Enterprises (MSMEs) employ the majority of the country’s workforce
The private sector is the engine for innovation, investment, job creation, poverty alleviation and sustainable economic growth for any economy. However, the sector’s participation in cross-border trade is often hindered by tariff and non-tariff barriers (including complex customs and trade procedures), high transportation costs and a lack of access to information. These are some of the issues that the AfCFTA will seek to address. It will progressively remove tariffs on 90 % of goods (with 10% of sensitive items to be phased in later) as well as resolve the challenges of multiple and overlapping memberships, both of which will make it easier for businesses to trade across the continent. The AfCFTA is also expected to enhance competitiveness of local enterprises and promote industrial development. None of this will be possible, however, unless the legal instruments of the Agreement are fully implemented. These legal instruments represent an opportunity to establish strong governance structures as well as a stable and predictable business climate when trading or investing across borders.
The AfCFTA will need to build on the work done by various Regional Economic Communities (RECs) as it relates to private sector participation. For example, the Southern African Development Community (SADC) Secretariat Directorates, with support from various committees, have established consultative mechanisms with the private sector on various topics, including infrastructure development, food security, customs and mining. Additionally, SADC has the Support to Industrialisation and the Productive Sectors (SIPS) programme, which is supported by the European Union and the German Federal Ministry for Economic Cooperation and Development to facilitate the expansion of regional value chains and promote dialogue between the private and public sectors. Such mechanisms and programmes must be infused into the AfCFTA negotiations and implementation of the Agreement. SADC represents just one of at least 8 RECs found across the continent, all of which have approached private sector participation differently. The progress that has been made in these RECs in terms of private sector participation is the key building block for greater private sector participation in the AfCFTA.
To further achieve success in the implementation of the AfCFTA, it will be important for the Zambian Government to actively engage the private sector at all levels because it is a key stakeholder in the Agreement. To date, there has been limited direct involvement of the private sector in the negotiations of the AfCFTA, which demonstrates the importance of such engagements. To this end, it is commendable that Zambia’s Minister of Commerce and Trade, Mr Chipoka Mulenga recently stated that the private sector will be briefed on the provisions of the agreement and engaged as the negotiations proceed. This will further need to include the likely impacts of the Agreement on the sector as a result of the increase in competition that will come with open borders.
The AfCFTA will not achieve any success without the involvement of the private sector. It is therefore critical that they receive the necessary support in order for them to have a major developmental impact in Zambia and Africa at large.