Malawi has finally endorsed the ratification of the African Continental Free Trade Area (AfCFTA) after years of securing a consensus to ratify the continent’s biggest single market.
Ministry of Trade spokesperson Mayeso Msokera on Monday confirmed about the endorsement to ratify the agreement following fruitful discussions with other stakeholders, including the private sector.
The endorsement comes two months before the AfCFTA is set for its official operationalisation on January 1 2021.
Prior to the endorsement, Malawi had already signed the deal on March 21 2018 in Kigali, Rwanda.
Said Msokera: “Malawi held successful consultations with the private sector through the Ministry of Trade, which led to an endorsement for ratification of the agreement.”
He said the Ministry of Trade and in collaboration with Ministry of Justice, is currently working on the AfCFTA instruments of ratification to be deposited with the African Union Commission.
“This follows an in-depth study that the Ministry of Trade undertook on the benefits that would arise from signing and ratifying this agreement and a successful extensive stakeholder consultation process, particularly with the private sector because we acknowledge that it is the private sector that will have to take advantage of this free trade area,” said Msokera.
The AfCFTA provides the opportunity for Africa to create the world’s largest free trade area as it has a potential to converge 1.3 billion people within an estimated $2.5 trillion economic bloc.
United Nations Economic Commission for Africa regional director for Southern Africa Said Adejumobi said in an earlier interview that the economic bloc is poised to create a continental market for goods and services, with free movement of people and capital and pave the way for creating a Customs Union.
He said AfCFTA is further expected to enhance competitiveness at the industry and enterprise level through opportunities for scale production, continental market access and better reallocation of resources.
“It will also grow intra-African trade through better harmonisation and coordination of trade liberalisation across the continent,” he said.
However, an earlier joint assessment by ministries of Trade and Finance revealed that government will have to forego trade tax revenue once the AfCFTA rolls out full-throttle.
Many least developed countries such as Malawi rely heavily on international trade taxes as a source of revenue to finance day-to-day government operations.
As such, there have been concerns that Malawi and other small economies may be left grappling with the negative effects of tariff cuts should the AfCFTA rolls out as designed.
Such concerns have led to Malawi and other countries push for special and differential treatment in the implementation of the AfCFTA’s provisions on the elimination of import duties and other tariffs.
Trade experts have also previously advised that the AfCFTA should be backed by increased productive capacity, enhanced regional value chains and remove internal obstacles to the growth of small and medium enterprises so that African countries, including Malawi, can compete well in the liberalised regional market.