By Beaven Dhliwayo
May 30, 2019 came as a major landmark achievement in African economics which saw the fruition of the much awaited African Continental Free Trade Area (AfCFTA), which when fully implemented is expected to boost intra-African trade.
It will be the world’s largest free trade area since the establishment of the World Trade Organisation (WTO) in 1994.
Government therefore is mandated to educate all entrepreneurs in the country so that they have a clear understanding of what the agreement entails and the benefits to expect if they use this opportunity to the country’s advantage.
AfCFTA comes with huge benefits and the country should not be seen lagging behind, but should grab this important initiative to boost its economy as it thrives for an upper middle income economy by 2030.
The benefits are huge and worth noting.
In addition to creating a massive market, it also eliminates 90 percent of tariffs.
The policy, which will come on the market on July 7, will be one of the world largest single markets, accounting for $4 trillion in investment across the 54 countries on the continent.
This is to be achieved by the creation of a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
The UN Economic Commission for Africa thinks AfCFTA has the potential to raise intra-African trade by 15 percent to 25 percent, or $50 billion to $70 billion, by 2040.
Worth noting is the fact that over the last decade, exports of African services grew rapidly and the trend could accelerate even faster as more African start-ups gain traction from fintech services which will disrupt traditional sectors.
The Transitional Stabilisation Programme (TSP) seeks to harness the digital economy and digital entrepreneurship which it says has the potential of creating jobs for the youth, often at low cost.
Over the years, technology has proven that it is essential to the movement of goods and services, especially with the introduction of pan-African business-to-business (B2B) and business-to-consumer (B2C) platforms.
Examples including, Zimbabwe’s EcoCash, Jumia and Kenya’s MPESA showing that Africa is truly becoming one market.
Proponents also hope it will encourage outside investment by creating and easing entry into a larger, single, seamless market for goods and services.
Brookings’s analyst Landry Signé estimates that if AfCFTA works as intended, Africa will have a combined consumer and business spending of $6,7 trillion in 2030.
The United Nations Conference on Trade and Development (UNCTAD), forecasts reducing intra-African tariffs under AfCFTA “could bring $3,6 billion in welfare gains to the continent through a boost in production and cheaper goods.”
As the country drives its mantra that it is open for business, AfCFTA presents unlimited opportunities to Zimbabwean entrepreneurs both young and old to access a larger market and it is wise for all to understand what it entails and benefits presented thereof to their businesses.
It is high time to restructure their businesses and shape their ventures to fully benefit from this historic agreement.
Executive Director of Tapiwa Capital, Gerald Chirinda says it’s envisioned that the free trade area will lead to increased competition, innovation and prosperity for Africa’s people in the long term.
“But for the AfCFTA’s gains to be realised, entrepreneurs and policy-makers must be aligned. They must engage with each other to provide structure and clarity around how goods and services will move, and around the benefits that the agreement will bring to business.
“These discussions between entrepreneurs and the trade ministries of their country will also enable the review and updating of national trade policies, discussions which will benefit both the Government and business communities,” says Chirinda.
What it implies is that Government ministries in Zimbabwe responsible for trade should embark on robust trainings of entrepreneurs across the board and equip them with the necessary skills and knowledge to fully embrace the new agreement for the good of the country.
This should start immediately and Government should bring in economic experts both local and foreign who will conduct massive workshops and trainings on the opportunities presented by adopting the new agreement.
This will also benefit citizens as they will now be able to purchase affordable goods and services.
However, of importance to note also is that the consequences of failing to address entrepreneurs’ concerns locally will result in failure to access the gains of the AfCFTA, and will lead to a burgeoning informal sector.
According to the International Labour Organisation (ILO), it is estimated that the informal sector accounts for more than 66 percent of total employment in sub-Saharan Africa and 52 percent in North Africa.
Zimbabwe on its part has the second largest informal economy as a percentage of its total economy in the world, after Bolivia.
In a working paper by the International Monetary Fund titled “Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?”, in which 158 economies were studied, Zimbabwe, scored of 60.6 percent, after Bolivia which topped at 62.3 percent.
There should be massive collaboration with the informal sector as well with the Government by offering them training, access to technology platforms and financing.
The Government should also not stop its efforts to formalise these crucial players of the country’s economy which will increase their success in the larger market presented by AfCFTA.
The formalisation process will also bring a cocktail of benefits to the economy such as employment, increase in fiscal revenue and overall improvement in quality of life.
Most importantly also, is that when Government conducts the trainings to empower local entrepreneurs they should keep gender equality in mind at all costs.
Zimbabwean women are the ones who should benefit the most from AfCTA as they have been leaders in cross-border trading for time immemorial.
Local women should take the lead role when these sessions begin of enunciating the challenges they had been facing during their ventures and what Government ought to do to improve on their businesses across the borders.
Government should empower its citizens to fully adopt AfCTA as it is a game changer and will lead to economic recovery of the country.
Source link : https://allafrica.com/stories/201906060612.html
Publish date : 2019-06-06 13:11:41