AFRICAN CONTINENTAL FREE TRADE AREA; Implications to African SMEs
Free trade area basically means a number of countries that agreed to remove the barriers (physical/laws/policies) to trade with each other.
In 2018, a new market was created under the African Continental Free Trade Area(AfCFTA) agreement and commenced trading on 1st January 2020 after 54 countries in Africa signed the agreement. This treaty is aimed at increasing intra-Africa trades, boosting the continent's economic strength while fostering harmony between the countries.
The practical implication to Small Businesses.
There are ways in which business owners across the continent can leverage this opportunity. Below is an analysis of what this means to small business owners.
Expanding your business (product/service) to other Africa regions is now easy; It gives you the opportunity to expand operations without necessarily incurring huge costs as trade liberalization will reduce customs duties and tariffs on goods exported or imported. In achieving this, you need to contact the trade and investment commission of your country to validate the needed documentation and other arrangements as local laws still vary. In practical terms, more studies still need to be carried out in terms of new costs of exporting goods to other countries, but the agreement is meant to reduce the financial cost of imports and export activities in the continent. The immigration or port authorities of each country will be in the best position to release updated figures regarding this.
More Foreign Investment; The agreement is meant to encourage investors as this means businesses can easily establish a presence in 54 countries depending on market demand and purchasing power of the buyers. Free trade does not only apply to goods and services, but also to investments. Business owners can therefore now easily source foreign funds for their business to foster more market dominance.
Enhances Competitiveness; The cost of production attributable will be reduced as raw materials can be easily imported, small businesses can also take advantage of advanced technology that might not have been available to them in foreign countries. Locally based businesses can now compete in the international market or even globally with such a competitive advantage.
Want more information on how this agreement affects your business and want to have a chat with any of our team, send an email to team@accounteer.com and we will gladly schedule a 30-mins chat with you.
