Non- tariff barriers rob African countries billions in US Dollars
Small, micro and medium- sized enterprises, informal traders, youth and female- led business operators play a crucial role in African trade but are disproportionately impacted by Non- Tariff Barriers ( NTBs) due to limited resources and access to information.
A webinar hosted by Conversations with Africa titled, ‘ Empowering Youth through entrepreneurship opportunities in AfCFTA’ this week revealed that massive opportunities that come with the new African market of 1.3 billion people might remain a pie in the sky for youth- led businesses if serious action is not taken to change the status quo.
This is in light of the imminent implementation of the African Continental Free Trade Agreement ( AfCFTA) that starts in January 1, 2021. A report by the United Nations Conference on Trade and Development ( UNCTAD) indicates that African countries could gain US$ 20 billion each year by resolving challenges presented by such barriers at continental level. These regulatory and procedural barriers include customs operations and border documentation requirements, rules of origin documentation, pre- shipment inspections, transport regulations, sanitary and phytosanitary measures ( SPS) and Technical Barriers to Trade ( TBTs). CEO of the Business Kraal and co- founder of Conversations with Africa, Neo Tlhaselo strongly believes that the reduction of non- tariff barriers to trade can increase the meaningful participation of the youth in international trade by lowering trade costs.
She said in the webinar that the AfCFTA is one of the frameworks that will go down in history as widely accepted by young people across the continent. She insisted that young entrepreneurs should be included in the integration process to drive a successful and sustainable AfCFTA.
Her view is that since the youth make up the majority of the population in Africa, with 60 percent under the age of 25 and 19 of the world’s 20 youngest countries in Africa, it is only natural that the youth are prioritised. “Young people are main producers and consumers, and the continent’s biggest resource though plagued by high unemployment, inequality, poor quality jobs, labour market inequalities and barriers to entry to cross border trade”. Tlhaselo worries about bottlenecks that continue to constrain youth from fully participating and benefiting from trade including, power dynamics, business networks based on age, lack of access to assets and finance, limited access to trade related or market information, administrative and regulatory frameworks that do not favour young people.
President of Business Botswana Gobusamang Keebine, who was also part of the webinar, says if the massive opportunities presented by the AfCFTA are not transformed into reality for youth entrepreneurs, they will remain just that, ‘ opportunities.’ Business Botswana, according to Keebine, has been extensively engaging the youth with a view to ensure that they are not only aware of the AfCFTA but take advantage of the opportunities it presents. “Our interaction with youth businesses that cut across all sectors including, construction, IT, retail and manufacturing is to ensure that they grow to become corporates,” he said.
He explains that the challenges befall this segment of the business community because they are mostly starting businesses for the first time. In addition, most of them do not have adequate financial resources while some do not have entrepreneurship skills and experience. Business Botswana appreciate, however, that this specific segment of the business community is smart, daring, and aspire to grow. Keebine says they are doing all they can to ensure that everyone benefits from the AfCFTA one way or the other, adding that it is important for them as Business Botswana for youth entrepreneurs to be ready for the new AfCFTA market. “This market will benefit those that are ready to take advantage of it,” he says, admitting however that for a long time Botswana has been relaxed, allowing for example South African products, to dominate the local market. “COVID has made us realise that we ought to be self- reliant, self sufficient first as a population of only two million, and then spread out to cater for the larger African market of 1.3 billion.
“We are interested in getting entrepreneurs to look outwardly and to prepare them to effortlessly and efficiently participate in this market.”
Ditec Mobile, a homegrown tech company that is already taking advantage of the African market is very much aware of the AfCFTA and its pending implementation. The youth- led company has been trading with the rest of the African continent since 2011, according to CEO Thatayaone Dichaba.
“In preparation of AfCFTA, we as a company, have built relations with potential clients across the continent; we have also attended physical and virtual workshops through the support of the Botswana Investment and Trade Centre ( BITC),” he says. In preparation of AfCFTA, among other opportunities, Ditec has recently registered their business in Mozambique. “We have a diverse clientelle in Mozambique, Tanzania, South Africa and Uganda.” The company is also in advanced negotiations with other clients in East and West Africa, and their hope is that the AfCFTA will facilitate access to these markets. Currently some of their challenges include, bureaucratic tendencies, a diverse business culture and exchange controls. Ditec is one in many local businesses that are bracing themselves for the AfCFTA. TradeBarriers Africa has since established an online portal where African businesses can report, monitor and get support to resolve barriers.
Botswana’s Minister of Investment, Trade and Industry, Peggy Serame participated in the joint meeting of African Ministers of Trade and the AfCFTA Council of Ministers responsible for Trade this week to map a way forward.
The objective of the meeting was for Ministers to provide guidance to the outstanding work on the negotiations of the AfCFTA in preparation for the 13th extraordinary meeting of the African Union Heads of State and government scheduled for December. Ministers are still to conclude many outstanding rules of origin issues before the extraordinary AU summit to enhance the coverage of preferential trade on January 1, 2021.
They also highlighted the need to fast- track operationalisation of the AfCFTA Implementing Structures such as the AfCFTA Secretariat to ensure their readiness.