Monday, April 15, 2024
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Traders await benefits of AfCFTA

This article is sponsored by UN ECA

Job Mangwalala, 55, sells curios at the tourist attraction center in Victoria Falls, Zimbabwe.

Mangwalala has run the business since 1996. He sells a variety of wooden carvings of animals, which are popular with tourists especially from Europe.

The business is his livelihood; it feeds and educates his four children.

But business has been tough.

“I sell less and for a long time compared to the years before Covid,” he said “Tourists who buy our goods have reduced.”

This has forced Mangwalala to look for market outside Zimbabwe.  Every six months, Mangwalala crosses the border into the South African city of Johannesburg where he supplies his products in bulk.

The incentive of doing cross border trade is clear. He sells more in a short time across the border than in Zimbabwe.  

Lion Park curio shop and the Chameleon market are two destinations for his goods in Johannesburg. 

It takes him one and half days to travel from Victoria falls to Johannesburg. Mangwalala cannot extend his stay in South Africa past one month. 

“I can’t stay for more than a month because I do not have a business permit that can allow me stay for three months in South Africa,” he said. “The process of getting a business permit is too long and complicated.”

At the Zimbabwe – South Africa border crossing point Mangwalala declares his goods for clearance, fills in the declaration form and pays duty of 60 Rands per kilogram of the good.

He spends $300 (6,000 rands) in total on transport and border clearance.

“Long time ago it was difficult to get the business visa and get cleared at the border but now it’s getting easier,” he said.

Mangwalala is thinking of venturing into other African markets such as Botswana and Namibia.

Venturing into other African markets has made Mangwalala and other like-minded traders attempt to come together to help and advice each other.

But those plans have not taken hold.

“There were plans to have a cross border association and we were a group of 100 traders who had registered to join but nothing has been communicated since,” he said.

“They mentioned AfCFTA to help us with trading in other countries which was a good thing but we haven’t heard from them again,” he said.

African Continental Free Trade Adrea (AfCFTA) is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs).

The overall mandate of the AfCFTA is to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion.

As part of its mandate, the AfCFTA is to eliminate trade barriers and boost intra-Africa trade.

AfCFTA is likely to reduce tariffs, boost economic growth and increase collaboration amongst African countrieswhich will help the continent meet both the objectives of the UN Sustainable Development Goals in 2030 and the African Union’s Agenda 2063 for the economic, social and political regeneration of the continent.

Enactment of AfCFTA would not only be a big boost to the likes of Mangwalala but also to more women who have joined the cross-border trade.

Rudo Kabete, 40 years, sells African outfits and fabric at her shop in Victoria Falls, Zimbabwe.  

She is a tailor by profession and started her business because of lack of employment opportunities. Together with five other women, they travel together and sell their goods beyond the Zimbabwean border into Namibia and South Africa.

“Selling outside the country is better because we sell in bulk and make good profit,” she said “Here in Victoria Falls we make very little profit and it is hand to mouth.”

It takes two and half days to travel to Cape Town. She stays in South Africa for three weeks selling her goods.  Kabete heads back home – Zimbabwe – for another three months before traveling out again.

“Declaration of the goods at the border is a lengthy process because you require approval from the agriculture and forestry commissions,” she notes as one of the challenges of doing cross border trade in Africa.

Kabete is a member of a local Lugwasyno women cooperative – with close to xxxxxx women, who support each other through advice and access to finance.

Kabete has not heard of AfCFTA and would wish to get an organization that can help women to declare their goods at the border as a group and not as an individual.

Kabete also works with Kenyan women traders who sell their jewelry in Victoria Falls.

They sometimes supply her with jewelry which she then sells in Namibia and Cape Town.

“It will be good if the borders are open so that I can also travel by myself to Kenya to buy the jewelry in bulk,” she said.

What Kabete and other traders in Zimbabwe are looking for is information and help to make their cross border trade easier.

Velile Dube, Client advisor, Zimtrade says that Zimbabwe government through the Ministry of Trade gives information to traders on the export market so that they can make informed decisions.

“The problem with the most traders like the curio traders, they do not adhere to the set standards where they are meant to export up to $2000 worth of goods,” Dube said.  “They instead smuggle their goods into the neighboring countries.”

Getting a business permit he said is not a challenge as long as they follow the process.

The government has a flagship program arketing and Branding for International Competitiveness (MBIC) Training Programme for marketing, branding of the products for export.

The challenge for most products in Zimbabwe is packaging that is of low standard, he said.

“We train traders, organize for trade fairs, negotiate deals for them and conduct advocacy so that the traders are aware of any new laws and agreements like AfCFTA and how they can benefit from it,” Dube said.

Stephen Karing, Integration Director at ECA says Under the AfCFTA, the opportunities for women traders access to a much bigger market and larger trading networks thus allowing for significant business expansion, outweigh the drawbacks like poor infrastructure, persistent gender-based violence and harassment, and corruption.

AfCFTA provides the first opportunity for continent-wide free trade, an important step as Africa moves towards the African Economic Community (which includes the stated aim of the creation of free trade areas, customs unions, a single market, a central bank and a common currency) in 2034.

“African countries do not trade with each other for other multiple reasons such as colonial ties, but with the introduction of AfCFTA, trading within Africa will be cheaper,” Mr Karing said

Under AfCFTA the pan African payment and settlement system is supposed to allow countries trade in their own currencies.

For example, if a trader from Ethiopia is trading with a trader in Nigeria, both central banks should be able to settle the payment of goods they are trading without worrying about the dollar exchange rate.

Another example is that of manufacturers are importing edible oils from Egypt, why do they have to worry about the sliding of their currency to the dollar if they can trade with the Egyptian pound?

AfCFTA would be pushing African countries to think about importation of their intermediate goods from within Africa and see if the pan African payment system works.

Pan African payment system is supposed to remove that stress of countries worrying about the cross-country exchange rate. In this case the exchange between Naira to dollar, or Birr to dollar

However, the adoption of the Pan African payment system will depend on whether these currencies are stable because if you do not have the right macroeconomic fundamentals and convergence then it cannot work.

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