Trade under AfCFTA kicks off, what does it mean?

African heads of state and government at the African Union Summit that saw the signing of the African Continental Free Trade Agreement in Kigali, Rwanda, on March 21, 2018.

On September 30, the first African Continental Free Trade Area (AfCFTA) Certificate of Origin for Rwanda was issued to Igire Coffee, a women-led coffee processing firm that deals in premium coffee, for coffee products destined to Ghana as part of the AfCFTA Guided Trade Initiative.

Earlier, on September 23, Kenya also made its first export under the initiative by exporting batteries to Ghana. Rwanda and Kenya are among the countries selected to participate in the pilot phase of the AfCFTA Initiative on Guided Trade.

The other countries involved in the AfCFTA Initiative on Guided Trade are Cameroon, Egypt, Ghana, Mauritius and Tanzania. This new development is the beginning of the first phase that was announced in July 2022, which is realizing increased intra-Africa trade. It seeks to demonstrate that the AfCFTA is functioning and set an example to countries that are yet to submit their provisional schedules of tariff concessions, according to the modalities agreed upon.

For Rwanda, the move marks the formal start of trading under the AfCFTA agreement. It also shows that Rwanda will now begin to access markets in west and central Africa on preferential rates, with a reduction in duties having begun in 2021.

Additionally, Western African countries such as Ghana, Senegal, Nigeria, Chad, and Benin are said to present great potential for trade and investment for Rwanda’s private sector.

The first export also opens doors for more trade as Rwanda is expected to trade other products across agro-processing, manufacturing and construction materials. These include pesticides; insecticides; telephones; textiles; processed foods such as flour, milk, cheeses, vegetables, and other horticulture products.

For the private sector this presents opportunities for trade in the African market, not only in goods but also in services, through agreements that Rwanda is part of. Although just one Rwandan company has started exporting coffee to Ghana more are expected to join soon.

According to the AfCFTA modalities, 90 per cent tariff offers fall under category A, where products had to be liberalized in 2021 and progressively reduced over 10 years. Seven per cent get liberalized over 15 years and three per cent of products are excluded from tax exemption.

Trading under AfCFTA, is also showing that African countries under the agreement, can identify companies, products, customs procedures, and logistics processes that are required for the trade to happen, and are successfully easing the process.

The landmark agreement, signed in Kigali in March 2018, makes it the world’s largest free trade area, with a combined Gross Domestic Product of more than $3.4 trillion, and expected to increase intra-African trade by over 50 per cent. This will be crucial for economic growth, job creation, poverty reduction, and social integration of the African people.

The AfCFTA will be the largest free trade area since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050. Some of its expected benefits include:

Increasing trade among African countries which currently ranges between 15-18%. 

Stimulate production through the development of regional value chains, to ensure that manufacturing, agro processing and other activities across the continent are stimulated to supply the market.

Strengthen the capacities of African companies to access and supply world markets.