Trade in services to begin under AfCFTA Guided Trade Initiative

Trading of services across the continent will begin in the next phase of the Guided Trade Initiative this year, said Wamkele Mene, Secretary General of the African Continental Free Trade Area (AfCFTA). ALSO READ: What is the AfCFTA Guided Trade Initiative all about? The initiative launched in July 2022, sought to test the environmental, legal and trade policy basis for intra-African trade in a pilot phase that involved eight countries namely, Cameroon, Egypt, Ghana, Kenya, Mauritius, Tunisia, Tanzania and Rwanda. ALSO READ: Rwanda begins trade under AfCFTA According to Mene, the exercise was a success and about 96 value-added products were traded among selected countries. They include air conditioners manufactured in Egypt, Ceramic tiles from Ghana, coffee from Rwanda, among others. “In our view, it was a successful exercise, we learnt a lot from it. There is trade taking place intra-regionally and the objective of the AfCFTA is to connect continental trade across regions.” What was remarkable is that private sector participation was largely Small and Medium Enterprises (SMEs) which is very important for inclusivity and the benefits of trade, he said. For instance, he noted, the tea that was exported from Kenya to West Africa was produced by smallholder farmers that the government organized into cooperatives to export under preferences of the AfCFTA. ALSO READ: Rwanda issues special freight tariff for AfCFTA traders As the Secretariat looks to expand the number of participating countries, meaning those that domesticated the customs requirements to engage in trade under the AfCFTA, Mene said that the services will also be added in the continental trade. “We have been directed by certain heads of states and governments to expand the scope of the guided trade initiative to include the service sector. That is the objective for this year.” “This is a critical step to a full operationalization of the AfCFTA,” he emphasized. The top five priority service sectors highlighted under the AfCFTA protocol negotiations include business services, communication, financial, transport, and tourism services. Jean Bosco Kalisa, CEO of East Africa Business Council (EABC), said that this is again another great opportunity for the private sector to access the wider market. For instance, it is estimated that 2 million trucks are needed for logistics purposes to drive trade across the continent, Kalisa noted as an opportunity for business players in the transport sector, adding an example of creating joint ventures in tourism, among others. In a continental market of 1.3 billion people with a combined Gross Domestic Product of more than $3.4 trillion, the immediate beneficiaries are women-led SMEs which account for close to 60 percent of Africa’s GDP and young entrepreneurs who seek to take advantage of the market. ALSO READ: Five things hindering businesses from seizing AfCFTA benefits Several tools such as the Pan-African Payments and Settlement System (PAPSS) were put in place to accelerate intra-African trade. In January 2022, the PAPSS was launched to allow a buyer in one African country to make a payment in his or her national currency and the seller in another country receives payment in their local currency. The development was taken up by a Rwandan firm, RSwitch Ltd –an e-payment operator mandated to expand the financial services ecosystem by delivering interoperable solutions –with plans to take the PAPSS to countries in East, Central and Southern Africa.

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Trade in services to begin under AfCFTA Guided Trade Initiative