Tanzania ratifies treaty for Africa free trade area

Friday September 10 2021
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Industry and Trade minister Kitila Mkumbo responds to questions during a Parliament sitting in Dodoma yesterday. Tanzania yesterday ratified the AfCFTA pact opening new trade opportunities for the country. PHOTO | SAID KHAMIS

By Alex Nelson Malanga

Dar es Salaam. After wide government consultations, Parliament yesterday ratified the African Continental Free Trade Area (AfCFTA) agreement, a move expected to attract more investors and enhance a rational use of the country’s human resource.

The agreement will provide a reliable bigger market for the country’s produce and human capital due to free movement of labour.

If the pact is implemented successfully, the newly formed free trade area would unlock a regional market of 1.2 billion people with a combined gross domestic product (GDP) of $3.4 trillion for international investors.

Parliament finally ratified the pact after a thorough analysis to ensure that AfCFTA did not contravene laws and regulations that guide business in the country.

Economist and business expert Donath Olomi said the pact would enable significant new market entry opportunities and spar investments due to an assured market.

“With the AfCFTA’s harmonising of regulations and tariff removals across the continent, would also create an enabling business environment across a number of economic sectors,” noted Dr Olomi.

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However, he was of the view that for the pact to be effective, a tool for resolving trade disputes should be developed and be active so that the same trade war which has been happening among East African Community (EAC) member states should not be repeated in the AfCFTA.

“Unfortunately, we have not been making good use of regional blocs due to trade barriers,” he pointed out, noting that it was high time the challenge was resolved.

Strong tendencies towards protectionist policies in many countries were likely to affect the extent to which free trade was actually practised, even if an agreement was reached in principle.

University of Dar es Salaam economics don Abel Kinyondo said the AfCFTA would give Tanzania an opportunity to trade with the rest of Africa.

However, he cautioned, Tanzania needed to come up with strategies that would enable its players to increase their competitiveness for them to effectively compete with the rest of the countries.

“The core to competitiveness is inward. We need to have plans and strategies,” suggested Dr Kinyondo.

“What I believe is that we are prepared to be competitive. We will not just be sitting back and observing.”

Asked on whether, AfCFTA came to kill the existing blocs like EAC and Southern African Development Community (Sadc), he said, no, backing his answer with assumption that the agreement would bring more benefits.

The AfCFTA hopes to double intra-African trade, which currently accounts for about 18 percent of overall trade, by removing non-tariff and tariff barriers on a wide range of goods and services.

In March 2018, African countries signed a landmark trade agreement, the AfCFTA, which commits countries to remove tariffs on 90 percent of goods, progressively liberalise trade in services, and address a host of other non-tariff barriers.

The AfCFTA agreement entered into force on 30 May 2019 after the treaty was ratified by 22 countries – the minimum number required by the treaty.

Trading started officially on January 1, 2021, signalling the commencement of Africa’s journey to market integration, after it was postponed by six months last year following the outbreak of the coronavirus pandemic.

Until July 31 this year, out of 55 African Union (AU) member states, 41 had already ratified the pact.