Since the African Continental Free Trade Area (AfCFTA) went in force in January last year, the East African Community (EAC) stands at 87 per cent of products to be traded under the agreement.
Under the AfCFTA agreement, a country or member states of a bloc should have at least 90 per cent tariff offer to be allowed to trade within the framework on agreed rules of origin.
According to Antoine Kajangwe, Director General of Trade and Investment in the Ministry of Trade and Industry, the remaining task is to agree on the remaining three per cent of products as a bloc.
"The 87 per cent in the grand scheme of things means hundreds of products that member states are already agreeing to. Given that you are negotiating with 54 countries, it takes some time to ensure that all interests of every member state are aligned,” he said.
The AfCFTA is a member-driven and consensus-driven institution, meaning that all members have to agree or nothing gets on the paper, he added,
According to the AfCFTA modalities, 90 per cent tariff offer fall under category A, where products had to be liberalized in 2021 and progressively reduced over 10 years. Seven per cent get liberalized over 15 years and three per cent of products are excluded from tax exemption.
Gains registered
Prudence Sebahizi, Chief Technical Advisor at AfCFTA Secretariat, said that over the past year, there has been progress in establishing institutions, such as the dispute settlement body, among others to implement the agreement.
In terms of continental trade done over the past year, Kajangwe said that there has been growth of diversification in increasing African markets that Rwanda can take advantage of.
For instance, in the first eleven months of 2021, Rwandan exports within Africa amounted to $830 million, representing 56 per cent of total exports.
Despite DR Congo taking 68 per cent of Rwanda’s exports to Africa, the country exported to 30 different African countries.
However, he said that there is still a huge dependency on imports outside the continent, where only 36 per cent of Rwandan imports worth $908 million were from African countries.
Service commitment is another area that has seen a lot of progress, according to Kajangwe, it has started face to negotiations with draft protocols being shared.
"Services are fundamental aspect for Rwanda as a knowledge-based economy, we are looking at finance, transport, communication, architecture, things that Rwanda has developed a really good competitive advantage.”
‘Rwanda eyes western African markets’
Rwanda has identified a number of countries where the private sector can easily find potential in trade and investment, said Kajangwe.
"We anticipate that the AfCFTA should open up doors to these markets that have huge purchasing power and that want quality products that Rwanda is starting to gain a reputation for producing,” he said.
In terms of those products, in line with the National Strategy for Transformation (NST1), he pinpointed Agro-processed products, light manufacturing products and construction products.
"Countries in Western African that we have not traded with a lot in the past such as Ghana, Senegal, Nigeria, Chad, Benin, which today, we are starting to see an improvement and expansion of trade,” he said.
This is in addition to east and central African countries with which Rwanda has bilateral agreements such as Central African Republic, Mozambique, DR Congo, among others.
The AfCFTA, the largest in the world in terms of participating countries since the formation of the World Trade Organization, was brokered by the African Union (AU) and was signed in Kigali, Rwanda on March 21, 2018.
It covers 54 African countries, 43 of which have already ratified the agreement, with 39 state parties officially recognized, including Rwanda.
On July 30, 2021, Rwanda initiated a process to domesticate the Economic Community of Central African States (ECCAS) trade tariffs in the country’s trade laws.