Accelerating AfCFTA Implementation: Why Access to Information is Critical
The Progress Thus Far and the Vital Role Innovative Methods of Deepening Private Sector Engagement Will Play
Data shows that micro, small, and medium enterprises (MSMEs) make up 90% of all African businesses and employ more than 50% of the workforce.
The widespread presence of SMEs means they dominate the trading landscape. Much of that trade is between Africa and the rest of the world.
The Africa Continental Free Trade Area Agreement (AfCFTA) intends to change this by boosting intra-African trade from a paltry 15% to a more robust 25% by 2040.
It is a noble goal, but to succeed, African businesses, especially MSMEs, must refocus on African markets and start trading under AfCFTA.
The 2022 survey of over 800 African CEOs by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC) indicated that the private sector was optimistic and ready to adopt AfCFTA. However, industry leaders were discouraged by the lack of adequate information.
"…The lack of freely available information makes implementing the agreement more difficult. Even when specific regulations surrounding AfCFTA are made more readily accessible, the information must be kept up to date…"
The AfCFTA Secretariat, already aware of this shortfall, started taking steps to develop solutions as soon as the agreement was launched.
The Progress Thus Far Regarding Access to Information
In 2022, the AfCFTA Secretariat partnered with the MasterCard Foundation to launch a private-sector engagement strategy. The strategy focuses on four priority sectors with the potential for quick wins—automotive, pharmaceuticals, agro-processing, transport, and logistics.
The Secretariat also plans to develop a thorough understanding of the agreement among the business community. Cynthia Gnassingbe-Essonam, a senior advisor to the AfCFTA Secretariat, confirmed they would focus on targeted support, SME education, and skill development.
The AU, on its part, partnered with the International Trade Council (ITC) and the Africa Export-Import Bank (AFREXIM) Academy to develop a course on "How to Export with AfCFTA." The course is free and open to all Africans. There is also a promise to keep creating more courses.
The AU has also developed resources and published policy documents that offer extensive information about trading under the agreement. These include a Study on the Opportunities in the AfCFTA for Women in Informal and Cross-Border Trade, AfCFTA Questions and Answers, and Training Modules on Rules of Origin.
International organizations have not been left behind.
As part of implementing AfCFTA, the International Trade Center (ITC) set up an Africa Trade Observatory (ATO) to help propagate trade information.
The ATO focuses on four primary areas.
Training the national government staff on how to maintain quality trade data
Equipping business people and policymakers with the skills needed to analyze and use trade data
Creating an online portal that offers trade information
Monitoring market access, competitiveness, regional integration, use of trade preferences, and border procedures.
Individual countries are also doing their part. Kenya, for instance, has frequently organized local, national, and regional trade events and exhibition shows to facilitate market access.
Through the office of the SMEs' registrar, the Kenya government also undertook a formalization process to make it easier to access SMEs for interventions such as grants and skill development.
The relevant stakeholders are doing their best to get the information out so that SMEs can equip themselves and start trading.
That, unfortunately, is not enough. There is one more step: getting SMEs to engage with the information.
The Necessity of Encouraging SMEs to Engage with Available Information
Although the RECs and AU are people-centered, most Africans still think nationally rather than regionally or continentally.
As such, they will not go out of their way to seek information about regional or continental projects. Most of the time, they do not even know about them.
So, while the AFREXIM bank offers an excellent course on AfCFTA, the chances are high that many Africans do not know about it.
The lack of regional or continental engagement is why RECs struggle to get their citizens to take advantage of favorable regional policies. The former chairman of the East African Community, President Evariste Ndayishimiye, noted this when he said that each partner state needed to add sensitization sessions to their action plans.
To avoid a situation where the AfCFTA fails to kick off because of a lack of engagement, the stakeholders must develop innovative ways of meeting SMEs halfway or all the way.
Here is an overview of two methods worth considering.
Partnering with Organizations That Have Close Ties to The Community
A while back, I was in Arusha for a women's conference organized by Divine Ministries, led by Pastor Bahati Mwakalinga. One of the speakers—Dr. Jacky Mkindi (CEO of the Tanzania Horticultural Association—TAHA) spoke about 'investing in agriculture.' She mainly explored the different avocado value chains.
The information was valuable, well-delivered, and packaged in a manner that was so easy to understand that it inspired me to invest in avocadoes. Many people who attended the conference noted the same.
That right there is the importance of delivering information using accessible platforms—it motivates or pushes people to take action.
There is a good chance that information on avocado value chains is available somewhere. However, because it hasn't been packaged in an accessible manner, many people still believe that avocados have only one value chain—exporting the fruit.
Similarly, in African countries, the RECs, the AfCFTA Secretariat, and various stakeholders must partner with organizations that have close ties with the community to help package information in an accessible manner.
Developing platforms or information hubs and hoping SMEs will engage is not enough. Sure, some will, but the majority will not, and AfCFTA needs many African businesses to engage and trade under the agreement to achieve all its goals.
Another thing is that organizations with ties to the community understand the kind of speakers the business community in that region will respond to.
An AfCFTA Extension Officers Program
Extension officers are typically found in the agricultural sector. They are intermediaries between farmers and research. The officers create an enabling environment for farmers by ensuring they have the appropriate information to make decisions that yield the best results.
Whether continentally, regionally, or nationally, AfCFTA can do something similar. The AfCFTA extension officers will be the intermediaries between MSMEs and research. They will update business owners with the latest information, including policies, rules, regulations, market opportunities, value addition, and trade facilitation.
Where needed, the officers will walk with the business owner from production to export, at least for the first time, until the business owner gets the hang of things.
Precedence has already proven that extension officers can have a massive impact. Between 2009 and 2011, maize production in Kenya skyrocketed from an all-time low of 191,000 tons to 405,000 tons due to a revitalization of the extension officers’ program.
The country maintained high production until 2013 when it started falling again.
In an interview with a now retired agricultural officer, he noted that maize production fell after 2013 because devolution kicked in and the agricultural extension officers shifted from the national to county government.
The county governments could not facilitate a smooth transition, so many extension officers retired, leaving no one to fill the gap.
It shows how big of an impact the officers had that production fell as soon as they stopped operating optimally.
Something else that lends credence to how beneficial extension officers can be is how hectic understanding trade matters can sometimes be.
In a Facebook group, Kenya Cottage Industries, Arise, someone asked, "Kenyans, you have been given a duty-free market to the UK, and you cannot export. Why?" Someone responded that understanding the process was too difficult.
Most MSMEs are willing to expand their trade portfolio. After all, more trade means more money. However, business owners shy away because they need help understanding the protocols, rules, and everything in between.
An extension officer is the perfect middle person to hold the hands of business owners.
These two possible solutions are insufficient but are a good starting point for deepening private-sector engagement.
REFERENCES
Ruchira Kumar (2017). World Bank Group Jobs. Jobs Working Paper Issue No. 3. Targeted Financing for SMEs and Employment Effects: What Do We Know and What Could Be Done Differently.
Africa Export-Import Bank (2022). How to Export with the AfCFTA Training Program. Module 1: The Opportunity of Intra-African Trade
PAFTRAC Africa CEO Trade Survey Report (2022). Assessing the Impact of the AfCFTA on African Trade.
Patrick Utomi (2022). The vast majority of African CEOs are positive about AfCFTA. Available at https://african.business/2022/06/trade-investment/vast-majority-of-african-ceos-positive-about-afcfta-finds-paftrac-survey/
AU. Resources. Available at https://au.int/en/resources/filter
Kenya National Bureau of Standards. Kenya Agricultural Production Sales: Annual: Maize. Available at https://www.ceicdata.com/en/kenya/agricultural-production-sales/agricultural-production-sales-annual-maize