As at the end of 2021, Uganda’s exports to Africa were valued at an average of $1.4 billion. This constituted more than 40 percent of the country’s exports to the entire world.
Most of the export destinations in Africa are under the Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC). Under the African Continental Free Trade Area (AfCFTA), up to 90 percent of liberalised goods will have tariffs significantly reduced by 2030.
With the elimination and reduction of tariffs, removal of non-tariff barriers and implementation of trade facilitation initiatives, Uganda is likely to increase market penetration among African counties, especially those outside Comesa and EAC.
In 2012, the African Union adopted the Action Plan on Boosting Intra-African Trade which has seven action clusters, among which is trade policy. In January 2015, AU Heads of States adopted Agenda 2063, “The Africa we want”, as a shared framework for inclusive growth and sustainable development for Africa to be realised over the next 50 years. As part of these initiatives, the AfCFTA was signed in Rwanda on March 21, 2018, and entered into force on May 30, 2019.
Much as trading under the AfCFTA was formally launched in January 2021, practically, it is yet to start – pending finalisation of key instruments such as the schedules for tariff concessions, rules of origin, and schedules of commitments for trade in services.
In pursuit of the National Development Plan III goals and aspirations, Uganda wishes to refocus the trade policy environment as a state party to the AfCFTA Agreement. This policy direction intends to facilitate the identification of key value addition and trade opportunities and constraints thereof, measures and capacities required to take full advantage of national, regional and global markets within the context of AfCFTA.
It is anticipated that the AfCFTA will, among others; increase Foreign Direct Investment (FDI) inflows and create jobs, enhance competitiveness and build local production capacity. It also promotes industrial development through diversification and value chain development; increase market opportunities; liberalise services and foster their exploitation, develop e-commerce with digital transformation; contribute to the empowerment of the youth, women and persons with disabilities, exploit the potential of micro, amall, and medium-sized enterprises, ultimately leading to the economic transformation and poverty reduction.
As a major step to start trading among the AfCFTA state parties, the Secretariat launched the Guided Trade Initiative (GTI) in Accra, Ghana, on October 7, 2022. It seeks to foster commercially meaningful trading and to test the operational, institutional, legal and trade policy environment under the AfCFTA. The products earmarked to trade under this initiative include ceramic tiles, batteries, tea, coffee, processed meat products, corn starch, sugar, pasta, glucose syrup, dried fruits, and sisal fiber, among others. A significant proportion of these products include Uganda’s leading exports to the African continent.
The GTI started with eight countries: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia, and these represent five regions of Africa, among other criteria. Uganda is likely to join in 2023. The AfCFTA Secretariat will support the GTI in trading, from shipment to customs clearing, and presents an opportunity to monitor the impacts of trade documents and procedures on pre-selected goods to get a sense of whether tariffs are reduced in line with AfCFTA procedures.
Uganda needs to meet the requirements, which include the deployment of the AfCFTA E-Tariff Book and the Rules of Origin Manual and officially publishing the country’s tariff rates and having them approved by the Secretariat. Uganda is in the advanced stages of meeting these requirements. It, therefore, will see increased trade with the AfCFTA State Parties in 2023 as proposed in the Draft National AfCFTA Implementation Strategy being prepared by the Ministry of Trade, Industry and Cooperatives. Furthermore, intra-continental trade and investment will be rapidly boosted by the launch of the Pan-African Payment and Settlement Systems (PAPSS), which overcome the challenges associated with foreign exchange requirements to trade.
This article was first published in the Daily Monitor
