Associated Battery Manufacturing EA Ltd becomes the first Kenyan company to trade under the Africa Continental Free Trade Area (AfCFTA), following the exportation of exide batteries worth Sh9.3million to Ghana.
Launched for trading in January 2021, CFTA is a game changer in overall global trade, and Africa, which accounts for 2% of global trade and 20% of Africa’s exports being intra-African, compared to 59% for Asia 68pc for Europe.
Kenya is among six countries selected to participate in the pilot phase of the AfCFTA Initiative on Guided Trade, formulated on realization that no trading was taking place one-and-a-half years after the launch of AfCFTA preferential trading on January 1, 2021.
The other five countries are Cameron, Egypt, Ghana, Rwanda and Tanzania, under a program to kick-start trade between and among State Parties that have signaled their readiness to commence commercially meaningful relations through the utilization of AfCFTA preferences.
Part of the requirements in the pilot project is for the pilot countries to identify products that can access the markets among the pilot countries.
Kenya for instance has identified sisal fiber, tea, exide batteries, avocadoes confectionery, leather bags, vehicular filters, textiles, and fresh produce as part of these initiatives.
Following the delivery of the consignment, Kenya and Ghana said the two countries are keen on using the AfCFTA Agreement to create jobs and market for their goods and services, thereby keeping wealth within the African continent.
Corporate Juror earlier spoke to international trade law advisor, Ahmed Yasin who says that the CFTA, if well implemented, will also transform the African continent business environment and further cement it as the world’s largest market. According to Ahmed the CFTA will improve Africa ‘s trade by 15 pc, while the removal of non-tariff barriers and improving trade facilitation through the agreement, is expected to lead to an increase of exports by 29% exports by the year 2035.
Other benefits that Kenyan SMEs are likely to reap include access to financing which has remained a challenge for the small and medium businesses, who also struggle to access much needed financing from bank institutions. The CFTA secretariat has signed MOUs with entities such as Afri-Exim Bank, Equity Group among others to procure funding for SMESs. “If an SME can show that it plays a role in the production of made in Africa commodities, it will be able to access funds”, says Ahmed.
Under-developed value chains in Africa, high level of tariffs across regions, poor infrastructure and lack of access to markets to test products are the other challenges that Kenyan and African SMEs face. He says implementing the CFTA will also help Africa weather shocks better, citing the global Covid 19 pandemic.
The inaugural exportation of the batteries comes even as Parliament is expected to develop policies to ensure the CFTA is implemented and observed. Ahmed notes that every international treaty that Kenyans become a signatory, automatically becomes part of Kenya’s legal framework, requiring parliament to develop legislation to support the same.
More than 43 countries have given their tools of ratification representing 80% of members, while 88% of the negotiations on products and rules of origin have been concluded for this agreement.