Long-awaited African Continental Free Trade Area (AfCFTA) that became operational January 1 this year, has published guidelines on how the world’s largest economic bloc by membership, will conduct business.
However, it remains to be seen how the continent will resolve issues related to non-tariff barriers, such as infrastructure, that are expected to hold back economic and social integration of the continent that has also to deal with a divisive colonial past.
The operationalisation of the agreement is a milestone for intra-Africa trade, says the Tax and Investment Desk of Centurion-Plus in an impact report.
“The AfCFTA eliminates tariffs on 90 per cent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons. It consolidates a market of 1.2 billion people and a combined gross domestic product (GDP) of $2.5 trillion,” says the report.
While the private sector in Africa has been grappling with dealing with the effects caused by the Covid-19 pandemic, the AfCFTA provides for key benefits such as open borders, improved contracts and better structured value chains.
According to the report, “The private sector being a key stakeholder and a major beneficiary of the AfCFTA has a lot that it can benefit from the AfCFTA.”
The AfCFTA provides an opportunity for businesses to expand into African markets through the liberalisation of markets and the progressive reduction of access barriers within the continent.
“In addition, businesses can take advantage and participate in supporting the diversification of African economies away from low-value-added products and commodities as well as in the development of regional value chains. The AfCFTA enhances competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources,” says the report released on Monday in Johannesburg, South Africa.
Taking this into account, the Tax and Investment Desk of Centurion Plus launches the AfCFTA Impact Report, which will provide critical business impact assessment, especially for multinational companies and investors conducting business in Africa under AfCFTA protocols. This is a bespoke report for each entity and will be powered by Centurion’s fully integrated resource base of country-qualified and internationally mobile professionals in all 54 countries in Africa.
AfCFTA impact report is a guide to what businesses need to know about the African Continental Free Trade Area, which include: AfCFTA’s impact on movement and provision of goods and services and the respective taxation outcomes; business optimisation opportunities; customs and immigration; employment, including movement of personnel and potential changes in permit laws and regulations; intellectual property; trade and investment advantages; potential anti-trust and market access issues; potential environmental obligations; legal issues surrounding mergers and acquisitions and dispute resolution.
In releasing the report, it hoped that the guide will assist businesses and investors to identify the major opportunities provided by the AfCFTA, while also identifying the blind spots and shortcomings in terms of the business models to adopt.
- A Tell report