KEPSA in partnership with East Africa Business Council (EABC) organised a two-day national sensitization workshop for SMEs and Women in business on Africa Continental Free Trade Area (AfCFTA) protocols and their relevance to business in the East Africa Community (EAC) region, from August 23^rd to August 24^th 2023, at a Nairobi Hotel. The main goal of the training was to help unpackage the complex AfCFTA agreement to help SMEs understand and position themselves to benefit from the opportunities that are presented by the AfCFTA. Trading is already taking place under the Guided Trade Initiative (GTI) which has seven countries piloting under AfCFTA with three countries from EAC being part of the initiative; Kenya, Rwanda and Tanzania.

Mr Victor Ogalo, KEPSA Deputy CEO noted that, AfCFTA seeks to grow the intra- African trade for approximately 15% to 40% or more by the year 2030. He further noted that private sector in the continent will play an immense role in achieving this great and noble objective in tapping into the 1.3 billion population market estimated at $3.4 trillion. He also emphasized on the need to de-risk SMEs, where Banks are seen to lend more to government (bonds and treasury bills) which have higher returns, as opposed to "high risk" borrowers which includes individuals and SMEs.

EABC CEO, Mr John Bosco noted that, SMEs must produce goods that are required and meet the standards of these huge markets presented by AfCFTA.

“Don’t sign business deals without proper procedures…friendly and mutual agreements don’t work. You must sign contracts which are binding,” said Mr Olivier Konje, Director of international trade at the Ministry of Trade, Investment and Industry (Kenya). He also noted that the workshop training would help SMEs understand these procedures.

The forum identified Non-Tariff Barriers, lack of harmonized tariffs and inadequate access to financing as among the significant challenges facing business, hence slow uptake of opportunities under the AfCFTA.

During the training, participants were taken through the principles of AfCFTA, the scope of the AfCFTA that has the two phases of negotiation with various protocols under each phase. Phase one of the agreement has the protocol of trade in goods, that is already operational. Phase two of the agreement captures trade in services has various protocols; competition and investment, intellectual property rights, digital trade, women and youth in business and the AfCFTA Adjustment Fund. The participants were also taken through the nine annexes of the protocols that are very key and important for SMEs who wish to transact under the AfCFTA. The Annex on Non-Tariff Barriers (NTB) can be accessed on www.tradebarrier.africa (current AfCFTA agreement) and www.tradebarriers.org (tripartite Free Trade Area; TFTA)

Prof Gor Seth, facilitator of the workshop, emphasized on the importance of understanding schedules of tariff concessions under the AfCFTA protocol that houses a list of negotiated specific concessions and commitments by each State Party. It sets out, transparently, the terms, conditions and qualifications under which goods may be imported under the AfCFTA. 

Day two of the workshop saw participants taken through instruments of AfCFTA operationalization that are key in the realization of the AfCFTA agreement. Online negotiation portal, AfCFTA NTB reporting mechanism available on www.tradebarriers.africa (Africa Trade Observatory (ATO)) that has a database of trading partner states (PSs), the Pan-African Payments and settlement system(PAPSS) AfCFTA Adjustment Facility (AAF) that will in October launch a credit facility to support SMEs facilitate trade under the agreement, AfCFTA e-tariff book that is available on etariff.au.afcfta.org that has schedule tariff concession of state parties and enhances the capacity of commodity classification, are some of the key instruments that SMEs need to be aware of to trade in the agreement.

SMEs who wish to begin trading under the AfCFTA can sign up on the AfCFTA Digital Hub platform. This platform connects state governments, small businesses and helps simplify AfCFTA for SMEs start-ups. However, to enhance the maximization of the potential of AfCFTA, there’s need to have access to credit for SMEs to help unlock supply-side constraints, have a vital liberalized transport system including a single Air Transport Market, integrated continental high-speed railway and harmonized communications across the region.

Availability of reliable and affordable energy is necessary in the success of AfCFTA, this is to be supported by Partner States to reduce cost of power to manageable levels. Continuous technological innovation is key in modern-day trade and an increase in access to technology is of great emphasis.

Harmonization of regulations and institutional frameworks such as policies will create a conducive investment environment. Call for collaboration of private sector stakeholders to facilitate dialogue on parallel initiatives is key to enabling the transition of the private sector to free trade. Competitive service sectors e.g. transport, ICT, tourism will make service providers competitive at the continental level.

PSs ought to support the integration of SMEs in the regional value chains through linkages and awareness creation while being inclusive (women, youth, PWD) to help exploit existing and potential opportunities. There’s need also to explore the technical assistance skills gap and strengthening regional value chains to attract local and foreign investors in existing and new sectors.