Botswana has ratified the African Continental Free Trade Area (AfCFTA) agreement, moving one step closer to allowing the country and its businesses to access a market of 1.2 billion with a value of more than $2.6 trillion.
The AfCFTA is the world’s largest free trade area developed under the auspices of the African Union (AU) to enable the free flow of goods and services across the continent. It is estimated that the AfCFTA has the potential both to boost intra-Africa trade by 52.3% and also boost the continent’s trading position in the global market.
President Mokgweetsi Masisi signed onto the AfCFTA in 2019 making Botswana the 51st of 54 African nations to agree in principle to the continental trade deal. Since then Botswana has been hammering out the modalities of the deal to ratify it, negotiating as a member of the Southern African Customs Union (SACU).
By the end of January, Botswana was one of 10 AfCFTA signatories still to ratify the deal, as local negotiators bargained over tariff lines for goods as well as rules of origin for the automobile industry, textiles, clothing/apparel, and edible oils.
On Saturday, Trade and Industry minister, Mmusi Kgafela told The Monitor negotiations had proceeded to the level where Botswana was comfortable ratifying the deal.
“We have ratified the AfCFTA and SACU has also placed its offer on tariff removal on goods to the AfCFTA,” he said from Addis Ababa, Ethiopia where the AU is holding an assembly of heads of state and government. “I am waiting for the offer to be verified after which Batswana can start trading under AfCFTA by exporting goods duty-free. “It might take a month or so to complete this work.”
Countries that are members of customs unions are required to approach the African Union Secretariat under their unions for finalising their tariff offers and other terms of the AfCFTA, rather than as individuals. By January, 89.7% of the lines of goods had been agreed upon at SACU, while an agreement was still required on the tariff offer for 11 lines of goods, which would take the total above 90%, at which point the Secretariat could assess if the offer was acceptable.
The SACU offer has reached the 90% threshold, The Monitor was informed.
“The SACU tariffs will have to be worked on too to give effect to the start of trading,” Kgafela said. “In a month I believe we should get running. “So, Batswana who have been itching to export should get ready.”
According to posts on BW Presidency on social media on Sunday, Masisi handed over the instruments of ratification to the AU Commission chair, Moussa Faki Mahamat. Masisi later said the ratification had come after a ‘very thorough’ assessment of the agreement which was necessary for the interests of both Botswana and Africa.
“We are confident we have achieved that,” he said in an interview with Btv. “It pleases me enormously that all that we have said about the AfCFTA and all the commitments we have pledged, with this ratification, we are in. We are in business.”
Masisi said local businesses and entrepreneurs needed to get to work in taking advantage of the continental agreement.
“It’s launch time. “They better get to business, get to work and all we have to do is facilitate and enhance that.”
The latest developments come after a week-long meeting of senior officials and African trade ministers in Gaborone recently where they ironed out other modalities of the AfCFTA, including rules of origin, the treatment of special economic zones, and dispute resolution within the deal.
Negotiations on rules of origin issues were particularly sensitive for Botswana, which saw its nascent automobile manufacturing sector in the early 2000s collapsed by complaints from South Africa on the local content of the vehicle assembly.
Rules of origin are legal provisions that are used to determine the nationality of a product in the context of international trade and SACU member states differed on sectors which are key for Botswana such as the automobile sector, textiles/apparel, and edible oils.
Published on: Mmegi online
Publication date: 20.02.2023