What is the African Continental Free Trade Area Agreement, (AfCFTA)?
The African Continental Free Trade Area, (AfCFTA) was established in 2018 as one of the flagship projects of the African Union Agenda 2063 with the main mandate to create a single continental market of 55 Member States of the African Union.
When did the African Continental Free Trade Agreement, (AfCFTA) officially come into force?
Trade under the AfCFTA agreement entered into force on 30th May 2019, 30 days after 22 countries had deposited their instruments of ratification. On 1st January 2021, Africa officially started trading under the African Continental Free Trade Area (AfCFTA) Agreement. The agreement covers trade in goods, trade in services, investment, intellectual property rights and competition policy as well as digital trade, mainstreaming of women and youth and an adjustment fund.
What does the agreement require the state parties to do?
The Agreement requires the state parties to:
- progressively eliminate tariffs and non-tariff barriers to trade in goods;
- progressively liberalize trade in services;
- cooperate on investment, intellectual property rights and competition policy;
- cooperate on all trade-related areas;
- cooperate on customs matters and the implementation of trade facilitation measures;
- establish a mechanism for the settlement of disputes concerning their rights and obligations; and
- Establish and maintain an institutional framework for the implementation and administration of the AfCFTA.
What are the general and specific objectives of the African Continental Free Trade Agreement?
The following are the general and specific objectives of the AfCFTA
The general objective of the AfCFTA agreement aims at integrating trade across African continent, which has long been limited by outdated border and transport infrastructure, and differing regulations across countries. Intra-African exports constitute 16.6% of total exports in 2017, compared with 68.1% in Europe, 59.4% in Asia, 55% in America according to UNCTAD.
The specific objectives of AfCFTA are:
- To create a single market, deepening the economic integration of the continent.
- To establish a liberalized market through multiple rounds of negotiations.
- Aid the movement of capital and people, facilitating investment
- Move towards the establishment of a future continental customs union
- Achieve sustainable and inclusive socioeconomic development, gender equality and structural transformations within member states.
- Enhance competitiveness of member states within Africa and in the global market
- Encourage industrial development through diversification and regional value chain development, agricultural development and food security
- Resolve challenges of multiple and overlapping memberships.
What are the benefits of AfCFTA?
- The AfCFTA will provide a global market for free trade of goods for SMEs and create new industries and opportunities for investment, placing the continent in a more favourable position globally.
- The AfCFTA will reduce market fragmentation and create a single market allowing African countries to be in a better position to negotiate prices, which in turn will better position the continent as a viable economic partner on the world stage.
- Both businesses and governments will have the ability to tap into various talent from different parts of the continent upon the AfCFTA
- Individuals will have a greater opportunity to seek employment and education opportunities in other parts of the continent.
- The agreement will enhance the competitiveness of the economies of State Parties in the global market, resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
- Increase employment and investment opportunities
- Increase local content and development of regional value chains
- Improve infrastructure and connectivity
- Collaboration in the development of joint infrastructure to facilitate intra-African business, especially MSMEs, women and youth
- Address the problem of Multiple Membership
What is the structure and scope of AFCFTA agreement?
Below is a diagrammatic representation of structure and scope of the agreement.
- F.N: Most favored Nation Treatment (MFN a WTO defining/ founding principle/ trade policy that requires member country to extend the same trade terms to all trading partners/nations
- M.A.A: Mutual Administrative Arrangements/ Agreement
Has KRA already implemented AfCFTA?
KRA has implemented AfCFTA through the following:
The Ministry of Trade & Industry in collaboration with other Government Agencies leads implementation of AfCFTA in Kenya. Kenya has exported its first consignment under the AfCFTA agreement to Ghana on 5th October 2022 through guided initiative established by AfCFTA Secretariat. This is after the Gazettement of EAC Provisional Schedules of Tariff Concessions of Category A products in September 2022.
Kenya Revenue Authority through the Customs & Border Control Department, C&BC. is in charge of issuance of preferential proofs of origin including the AfCFTA certificates of origin, by implementing following measures:
- Procured 15,000 AfCFTA certificates of origin. The first consignment under the AfCFTA framework was exported to Ghana on 5th October 2022. Other exporters who been exporting goods outside the AfCFTA framework have applied to export goods under the AfCFTA agreement and are being facilitated.
- Drafted and submitted for gazettement the EAC Schedule of Tariff Concessions for the AfCFTA for Category A products (90% of the tariff lines). The tariff concessions were gazetted on 6th September 2022.
- Sensitized customs officers stationed at border stations (Malaba, Busia, Isebania, Namanga, Loitoktok, Taveta, Lungalunga and Moyale) on their role of signing and issuing AfCFTA certificates of origin.
- Four (4) Rules of Origin, ROO desks have been set up in Loitoktok, Taveta, Lungalunga and Moyale. Customs officers operating the ROO desks will facilitate stakeholders with information on AfCFTA provisions among other concerns.
What is the procedure for registration as an AfCFTA exporter?
The following are the procedures for registration as an AfCFTA exporter
Customs & Border Control department is currently receiving applications from companies wishing to export goods under AfCFTA. The applicants are registered at any of the Rules of Origin offices located in Nairobi, Mombasa, Nakuru, Eldoret and Kisumu, upon completion of registration form that can be downloaded from the KRA website or issued by the Rules of Origin Office. Attachments to the registration application include;
- Copy of the business registration certificate
- Copy of the KRA PIN certificate,
- Copy of the particular business license where this is applicable (e.g. a valid HCD for horticultural products, Mining Licence for mineral products).
Exporters are verified to ascertain originating status of the goods intended for export as stipulated under Annex 2 to the Protocol on Trade in Goods. Qualifying exporters are allocated Reference numbers and can then purchase AfCFTA certificate of origin at USD 3 per certificate.
What is the process of filling of AfCFTA certificate?
An exporter seeking to export goods under the AfCFTA framework is required to fill and submit in triplicate an AfCFTA certificate of origin attached with export invoice, customs entry and other supporting documents.
What are the initiatives KRA has put in place to support AfCFTA implementation?
KRA has come up with initiatives to support the implementation of AfCFTA. The following are some of the initiatives:
- Names of contact persons for Rules of Origin as well as Authorized signatories to the AfCFTA Certificates of Origin were submitted to the AfCFTA Secretariat.
- Sensitization programme for the business community and KRA staff is ongoing.
- Establishment of Rules of Origin desk at OSBP’s to sensitize and create awareness on AfCFTA provisions as well as handle origin matters.
- C&BC Business Transformation Office (BTO) is in the process of updating the Customs systems and procedures to accommodate AfCFTA.
For more information, please contact:
Customs & Border Control Department
Trade Facilitation Division
Times Tower Building, 12th floor
The Rule of Origin Office
First Floor Block B1
Sameer Business Park, Nairobi, Mombasa Road
Telephone: 0709013334/ 070901660