NAIROBI, Kenya, Mar 26 – Small and Medium enterprises stand to gain the most from an Africa-wide agreement that aims to create a 1.2 billion market free of trade barriers.
Foreign Affairs and International Trade Cabinet Secretary Ambassador Monica Juma says the Continental Free Trade Area (CFTA) will allow SMEs to expand beyond the country boundaries.
Ambassador Juma says that when the CFTA is ratified in September, SMEs and the informal sector will be allowed to move their goods and services across the continent.
“Across the continent, the informal sector is estimated to bring about an income of between 40 to 60 billion dollars a year… so the idea is to create a value chain that starts at the lowest level that creates that prosperity for Kenyans and any other African that is producing,” said Juma in a Capital in The Morning interview.
The CS is banking on Kenyan SMEs innovativeness and level of entrepreneurship to compete favorably at the continental stage when the trade barriers come down.
The AU initiative will create one of the biggest continental markets where good and services will have free movement, growing intra-Africa trade from the current 14 percent compared to the EU which stands at 60 percent and about 30 percent in Asia.
44 African countries out of 52 committed to ratifying the CFTA last week in Kigali, Rwanda, with the notable absence of Nigeria, whose President, Mohammed Buhari, pulled out of the talks to allow ‘more consultations’ with Nigeria’s manufacturers and trade unions.
The free trade area is expected to come into effect in six months if a minimum of 22 countries ratifies the agreement.
“The signs are good. We have got information that countries are moving very fast with the ratification so we expect this (CFTA) to come sooner rather than later,” said Juma.
Kenya’s Cabinet will discuss and approve the CFTA this week before parliament debates the trade agreement that is also expected to create more job opportunities.