Posted on August, 15, 2021 at 11:22 pm
Dar es Salaam. Tanzania is waiting for the September House to ratify the African Continental Free Trade Area (AfCFTA) which is touted as a game changer in the continent’s trade, The Citizen can report.
Industry and Trade deputy minister Exaud Kigahe told The Citizen yesterday that the cabinet had in last week approved the document, ready for taking the same to Parliament slated to kick off on August 31 this year.
The question of the AfCFTA, the agreement which focuses on removing non-tariff trade barriers in the continent, he expounded, would be on top of the list of agenda in the august House.
The deal, signed by 54 of the African Union’s (AU) 55 member states, commits countries to 90 percent tariff cuts within a five-year period.
So far, 37 countries have ratified the treaty, with Tanzania being among those which were yet to ratify the pact aimed at creating a free trade area with more than 1.2 billion people.
“If all goes as planned, we expect to ratify the pact as soon as possible because that is our priority as a country,” insisted the deputy minister Kigahe.
On why it took long for Tanzania to ratify the agreement, he said, the government had to prepare the private sector for competition ahead.
“Ratifying the pact means opening doors for competition. That is why it has been taking long to prepare the private sector for that [competition],” he said.
“We don’t want Tanzania to become an exporter of raw materials and importer of finished goods.
“We don’t want to record the balance of the payment deficit.”
The projected benefits of the agreement are significant.
Some of the gains include increased economic growth of four percent and that Tanzanian exports to Africa will increase by between 23 and 32 percent, according to the United Nations Economic Commission for Africa (Uneca).
With expectations of a virtuous cycle of increasing intra-African trade and international investment, the AfCFTA has the potential to make a concrete impact on the lives of ordinary citizens across the continent.
By facilitating job creation and greater competitiveness of African micro, small and medium-sized enterprises (MSMEs), the AfCFTA will be a crucial ingredient in lifting people out of poverty and invigorating Africa’s growth trajectory.
Although Tanzania is expected to lose in the tariff adjustment, the losses will be offset by the long-term benefits.
Going by the Uneca, Tanzania may lose 1.3 percent of the total government revenue on removal of some tariffs but the country will benefit more from the trade pact.
The African business community is a key beneficiary of the agreement.
Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) president Paul Koyi said potential advantages to the private sector included increasing economies of scale.
With the pact it is easy for local businesses to scale abroad and thus it makes them more attractive for foreign direct investment.
“Tanzania is still an infant. We need to join forces with others in the continent for us to thrive,” said Mr Koyi.
He said that the implementation of AfCFTA was an opportune time for Tanzania businesses to expand while tapping into the rapidly growing markets throughout Africa.
The pact, he said, would increase intra-African trade, which is currently standing at only about 20 percent of the continent’s total trade with the rest of the world.
This compares poorly with Europe, North America and the Association of Southeast Asian Nations, where intra trade is estimated at 60, 40 and 30 per cent, respectively.
The African Union (AU) estimates AfCFTA will boost trade by 60 percent between the continent’s 1.2 billion people by next year.
This, said Mr Koyi, was important in setting a stage for economic independence.
“With globalisation, the world is like a village now. As a matter of fact, ratifying the AfCFTA is a way to go and we business community commend for that,” he said.
However, he said, for the country to benefit from the pact, members of the private sector needed to get prepared for competition.
“We don’t have to be just observers (who sit back and observe). We need to be partners,” opined Mr Koyi.
Confederation of Tanzania Industries (CTI) trade policy specialist Frank Dafa welcomed the expected ratification.
However, he called for the government to allay fears among manufacturers over the AfCFTA’s possibility to kill local businesses.
Mr Dafa was of the view that the government should see how it could facilitate local producers in terms of incentives for their products to become competitive enough to penetrate in the African market.
“The government should continue with its efforts in creating an enabling business environment,” he recommended.
This, he said, would increase confidence of the existing investors and attract new foreign ones (investors) to come and invest in the country.
“We need to be more competitive and consequently produce better products for consumers at cheaper prices enough to compete in the region,” opined Mr Dafa.\
Source: The Citizen