SMMEs help to lessen reliance on imports
•
Lynette Dicey
TRADE FINANCE
Different sectors have required different responses but, ultimately, what Covid-19 did was create better visibility of products we can manufacture locally and export to the rest of Africa, says Legwaila. The pandemic also accelerated the need for the bank
working capital needs during what was for many businesses a difficult period.
Diversity in intra-Africa trade
INSIGHTS: TRADE FINANCE
AfCFTA aims to remove trade hurdles
Iimplementing nontariff and trade facilitation measures is likely to be more complicated. To date 54 out of Africa s 55 nations are signatories to AfCFTA Eritrea is the exception and 34 countries have ratified the agreement, including most of Africa s major economies such as SA, Kenya, Nigeria, Kenya and Ghana. A number of customs unions, including the East African Community, the Economic Community of West African States, the South African Customs Union and the Central African Economic and Monetary Community, have submitted their tariff offers and were ready to trade at the beginning of 2021. The African Union has called for
other countries to ratify the agreement and submit their offers by the end of June 2021. There has been some concern from poorer countries which have relied on the income received from trading tariffs and are therefore hesitant to lower them, says Lodewyk Meyer, a partner in the Banking & Finance Practice at Baker McKenzie in Johannesburg. However, efforts to protect the most vulnerable countries include tariff protections for domestically sensitive products. In January the African Export-Import Bank announced it would fund a $1bn adjustment facility to allow countries which had adjusted their cross-border tariffs to offset their losses.
AfCFTA member countries will be able to draw from the fund by the end of 2021. AfCFTA is an ambitious plan that needs continent-wide political buy-in. So far it appears to have provided impetus for African governments to address their infrastructure needs and trade logistics systems as well as overhaul regulation relating to tariffs, bilateral
continent’s industrial deficit and reduce its reliance on primary goods exports. However, for AfCFTA to reach its full potential depends on each participating member country s political will to implement significant policy reforms and trade facilitation measures. There is no question that implementation will be a challenge. Lowering or removing tariffs is likely to be the easy part while
‘Improve SMME access’— report
Lodewyk Meyer impetus.