Private sector holds key to AfCFTA benefits

NEO SENOKO

MASERU – Strong private sector participation is key for Lesotho to benefit from the Africa Continental Free Trade Area (AfCFTA), government have said.

AfCFTA is a large and dynamic market for Lesotho’s exports, with 1.2 billion people and combined GDP of about US$2.5 trillion (about M35 trillion).

Local importers and manufacturers will be able to source inputs competitively from other African countries. Lesotho under SACU is engaged in bilateral negotiations with other AfCFTA member states. This will facilitate the start of trade under the agreement once the negotiations have been finalised.

To facilitate trading, the country has submitted the necessary customs documentation to the AfCFTA Secretariat. Each stakeholder has a role in the implementation of AfCFTA and the role of the government is to level the playing field while the private sector’s main role will be to trade under the agreement.

Since most African countries are at almost similar levels of development, it will be easier for MSMEs to meet each other’s specifications and requirements.

This was revealed by the Ministry of Trade and Industry on Monday this week during a media workshop on AfCFTA.

During his presentation Mpesha Selebalo from the department of trade said the government will facilitate private sector participation in networking platforms within the continent, as well as participation in regional trade fairs to meet potential buyers and explore markets.

“The National Trade Strategy launched in December 2020 provides guidance on policy options to be undertaken to improve private sector competitiveness. The ministry is also developing and implementing the linkages strategy objectives to create a pool of domestic enterprises to participate in value chains to stimulate rapid job creation,” Selebalo said on Monday.

The main objectives of the AfCFTA are to bring down barriers to trade, specifically tariffs and encourage free trade of goods and services among its member countries.

The continental free trade area further seeks to make the trading landscape in Africa simpler, more affordable and easier for businesses to trade across borders, including the MSMEs, while providing consumers with a variety of options and choices in relation to goods and services.

The agreement will certainly come with loss of revenue for the country as tariffs are reduced among member states.

But, with the opening of more market opportunities across the continent, the private sector should be capacitated to be in a position to take advantage of the market in order to drive the economy.

Since the beginning of negotiations in 2015, a total of 54 countries have signed the agreement while 38 countries have ratified the agreement. Lesotho ratified it in November 2020.

To date, member states have agreed to reduce tariffs amongst themselves under modalities that include tariff liberalisation with 90 percent of the tariff lines to be liberalised in a linear form over a 10-year period for Least Developed Countries (LDCs).   

Selebalo said the participation of Lesotho in these negotiations is to attract investment, increase job creation through industrialisation and value chains participation and also reduce the costs of doing business.

“Lesotho is a member of SACU and is participating in these negotiations under the umbrella of SACU. As a customs union, SACU shares a single common external tariff,” Selebalo said.

He said the country further aims to increase market access for exports and product diversity. Sectors of interest include textile and clothing, agricultural products and manufactured goods.

“However, trade liberalisation alone cannot guarantee maximum benefits and this necessitates assisting businesses, particularly MSMEs who may not have the capacity to increase their production.

“In the case of Lesotho, there are a number of projects that are being implemented in areas covering agriculture and manufacturing,” Selebalo added.