The African Continental Free Trade Area (AfCFTA) has called on governments to reduce taxes and duties on goods and services in order to boost African intracontinental trade. This message was passed across by Mrs. Emily Mburu-Ndoria, Director Trade in Services, AfCFTA Secretariat and guest speaker at the third edition of AFRAA SkyConnect Dialogues, a one-hour webinar which was held on May 5, 2021.
The Dialogue, which was aimed at discussing the role of AfCFTA in boosting trade within the African continent tackled major issues surrounding the liberalization of African markets, and illumined the strategies being put in place by AfCFTA to overcome the challenges it faces in realizing its objectives.
According to Mrs. Ndoria, the major role of AfCFTA is to coordinate intra-African trade within the framework of a free trade area. This implies the coordination of the free movement of goods and services cutting across all sectors (aviation included) within the African continent – obviously, the biggest challenge to this being the lack of harmonization of regulations across boarders:
“We have about one hundred and seven (107) land boarders across Africa, with mostly different regulations. How do you ensure that custom and visa-related issues, for example, are harmonized? This is a very big problem that hinders trade among ourselves in Africa, and we hope to regularize this under the AfCFTA agreement currently being negotiated”, she said.
As concerns the ever-burning issue of high taxes and duties, experts know that a drop in taxes/duties encourages trade which in turn increases government revenue; creates more jobs and skyrockets a nation’s Gross Domestic Product (GDP).
It was thus recommended that governments/state parties should learn to “let go” of the huge taxes/duties they impose so as to increase government revenue in the long term; as the attitude of “a-bird-in-hand” will not achieve much in the long run.
To encourage governments to liberalize their markets, the AfCFTA Director spoke about a “pocket” of the organization called the “Adjustment Facility”, created to provide a cushioning effect to governments, small and medium sized enterprises in Africa that will lose revenue as they liberalize their markets. These will be liable to receive a “compensation” in the short term, which will be calculated accordingly.
The AfCFTA boss also revealed that the organization has developed a protocol of investment meant to attract investors from in and outside the continent with the goal of boosting trade. As an example, investors are encouraged to build storage facilities at airports for the preservation of perishable goods being transported under the AfCFTA agreement.
Again, it was divulged that AfCFTA is considering the creation of the African passport to be used by business people seamlessly across African boarders.
Finally, it was suggested that awareness be created on the existence of AfCFTA; that governments and the private sector begin trading under the AfCFTA agreement and that everyone participate in the Intra-African Trade Fair to hold between the 8th and 14th of December 2021, as the event will attract investors from the world over and ultimately boost trade on the continent.
AFRAA Sky Dialogue is a programme of the SkyConnect series that hosts top professionals from the aviation, tourism, financial and economic sectors to discuss matters impacting the aviation sector.
