Government says the African Continental Free Trade Area (AfCFTA) is as a game changer to old behaviours and traditions as it will enhance trade among member states and create wealth to benefit its people.
Speaking during a sensitisation workshop in Lilongwe, Director of Administration in the Ministry of Industry and Trade Joseph Mkandawire noted that the initiative is premised on the realisation that countries have for a long time been trading with the outside world more than other economies on the continent.
Mkandawire explained that AfCFTA marks a new dawn for African economies, and brings hope to boost intra-Africa trade and a creation of a Pan African Market which would resulting in manufacturing exports within Africa and beyond.
He underlined the need for the initiative to be used as a vehicle for Africa’s economic transformation.
Among others, he cited ease in travel requirement, expanded market and enhanced competitiveness at industry and enterprise level through exploitation of opportunities, continental market access and better allocation of resources as some of the benefits Malawi stands to get from the arrangement.
The Ministry of Industry official stated that Malawi is proud of her decision to sign the trade instrument because the AfCFTA has accommodated her interests.
The interests include a longer period of 15 years for liberalisation against 10 years adopted by the majority and flexibilities to deviate from obligations in case of unforeseeable eventualities.
“As a country which has premised its development on a trade-based economic strategy, Malawi is committed to the AfCFTA and its ability to help create an efficient regional trade environment and rules-based system as an integral part of global economic and trade governance” Mkandawire noted .
He appealed to implementers to ensure the initiative should go further to address productive and supply side constraints that have hindered most African countries like Malawi from fully taking advantage of the preferential market access offered to them.
Mkandawire indicated that several factors in the agreement such as policy deficiencies in standards, ICT connectivity, complex trade procedures and documentation, need special attention before commencing the implementation of the AfCFTA.
Whilst acknowledging the loss of revenue which could be experienced during the process, he assured that they are working with the Ministry of Finance and Malawi Revenue Authority (MRA) as member states are expected to have reduced tariffs.
Afro Exim Bank is expected to cushion countries with grants to help in the revenue loss.
Current statistics show that 85 percent of goods traded in Africa come from outside the continent. Only 15 percent of goods traded in Africa are produced locally.
The meeting was organised in conjunction with the United Nations Economic Commission for Africa (UNECA) and African Union.
UNECA’s Director Said Adejumobi highlighted immense opportunities for increasing intra-regional trade, enhancing production, promoting economies of scale, creating jobs and raising incomes as some of the benefits.
He however cautioned that this has to be backed up by increased productive capacity, enhanced regional value chains, and removing internal obstacles to the growth of SMEs so that African countries can compete well in the liberalised regional market.
However concerns have been raised over competitiveness especially of local industries in a much liberalised market, the issue of jobs associated with it and government revenue.
Adejumobi quickly allayed the fears and concerns on the issue of ratifying the AfCFTA.
”Those fears are more perceived than real and this platform will offer us a unique opportunity to dispel those fears, raise issues, make clarifications, and come to a common but better informed understanding, on why we should be part of the AfCFTA process,” assured the UNECA official.
The initiative is set to create the biggest free trade area in the world with a market of more than 1.29 billion people and a combined GDP of more than US$2.5 trillion.