THE private sector has a crucial role to play in making regional integration work for East Africa and African continent in general as they are the ones that understand the constraints facing enterprises and take advantage of opportunities in trade agreements signed by governments.
According to Trade Law Centre (TRALAC), the private sector is a major engine for sustainable economic growth and development, job creation and poverty alleviation in Africa and across the world.
In Africa, the private sector accounts for 80 per cent of the total production, two thirds of investment, and three q uarters of credit, and employs 90 per cent of the working age population.
In addition, 90 per cent of the firms within the African private sector are small and medium enterprises (SMEs). However these businesses’ participation in cross-border trade is limited due to tariffs, non-tariff barriers which include complex customs and trade procedures, lack of access to finance, high transportation costs and lack of access to information, among others.
It is because of that the private sector is seen crucial in the implementation of the African Continental Free Trade Area which is about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.
This was the tone from the discussions of the meeting held last week in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.
The one-day meeting, organised jointly between the East African Business Council (EABC) and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.
The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.
And the growth potential is high and promising. According to Acting Director of ECA in Eastern Africa, Andrew Mold, African economies have a collective GDP of 2.5 trillion US dollars, making it the 8th largest economy in the world.
That makes the continent much more attractive to investment, both from within and from outside the continent. We support views of the Director General of Customs and Trade at the East African Community Secretariat, Kenneth Bagamuhunda who said the ex perience of regional economic communities should be used as the building blocks for the AfCFTA.
That is, AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks.