Ethiopia: Towards Embracing African Economic Integration through AfCFTA

1 Mon Ago
Ethiopia: Towards Embracing African Economic Integration through AfCFTA

BY WEGAYEHU MULUNEH

As the African Union (AU) and member state leaders, together with the respected private sector stakes, are working with greater hopes amidst challenges to the success of AU’s African Continental Free Trade Area (AfCFTA) project, the agenda has now become major discussion point, particularly among Africans engaged in the business and trade as well as economic fronts. The discussions AfCFTA are still on progressive discourse of various sorts.  And Ethiopia is a central character in this unfolding narrative. As the continent takes a historic leap towards economic integration, the world watches with anticipation, for the success of the AfCFTA promises not just a boost in trade and prosperity, but a brighter future for all Africans.

Africa, a continent with vast natural resources with millions of working power, remains with millions of its citizens living under poverty line. Critics blames African states for not connecting one another interms of business, economy, infrastructure among others. Even several neighbor states in the continent spend resources for border demarcation, political and armed struggle than joining hands for common interests and prosperity. This together with other external and internal factors, including the residual consequences of colonialism and neocolonialism have left the continent to rely on mostly western economy and market systems. This scenario brought together African leaders to find lasting solution.    It was to give a major rectification to such socio-economic and political entanglements that the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, which was held in Addis Ababa, Ethiopia in January 2012, passed a decision to establish a Continental Free Trade Area (CFTA) by an indicative date of 2017. After more than a decade now, millions of Africans have begun forwarding queries on the essence and applicability of Continental Free Trade Area.

The 18th session had endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration. The AfCFTA aims to bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion.

The objective of AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.

It also aims to expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across The Regional Economic Communities (RECs) and across Africa in general.

Resolving the challenges of multiple and overlapping memberships and expediting the regional and continental integration processes is also a key target to be achieved through AfCFTA.

It is also expected to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

So far, many states have been endeavoring to implement the program under the AU framework and independently.

For instance, Ethiopia, a landlocked nation with enormous population and fast-growing economy, has been doing its level best to AfCTA implementation. The country, like it was doing for about a century, has taken several bold measures to the realization of AfCTA, not only as beneficiary of this flagship project of AU, but also a driving force. Home to the African Union Headquarters, Ethiopia has championed the cause of continental integration for decades. And now, with the AfCFTA in place, the country stands poised to reap the rewards of a unified African market.

Ethiopia's strategic location, with easy access to both the Red Sea and the Indian Ocean, makes it a vital trade hub for the AfCFTA. Since improved infrastructure and logistics are key to unlocking the full potential of the AfCFTA, Ethiopia is investing heavily in these areas.

Djibouti, a neighboring state, is witnessing a surge in activity as goods flow between Ethiopia, Djibouti and other neighbor countries.

An employee at Port Djibouti talking to EBC World recently said, “Since the AfCFTA process came into effect, the volume of goods passing through this port has skyrocketed. It is exciting to see Africa finally trading with itself!”

Ethiopia's leadership role in the AfCFTA extends beyond its borders. The country is actively involved in shaping the implementation of the agreement, advocating for fair trade practices and ensuring that all African countries benefit from this historic initiative.

In an Exclusive Interview with EBC World, Harsh Kothari, a well-known Indian entrepreneur based in Ethiopia, said AfCFTA is a landmark trade agreement across Africa that takes on board many African countries, among which Ethiopia is one of them. He said as a business owner and decision maker, AfCFTA opens up a plethora of dynamic contexts and is an exciting time for businesses.

He noted that "It is exciting to imagine the 1.2 billion potential customers across Africa, not just the 110 million in Ethiopia! That is as good as having ten new countries full of eager buyers for my shoes, or chemical products etc."

Kothari believes that importing raw materials or equipment from other African countries under preferential tariffs becomes more feasible. This could lower our production costs and improve product quality if the resources are nearby and economical according to the entrepreneur.

He underlined that AfCFTA symbolizes unity, fraternity, and opportunity amongst African countries, African businesses and African people. It breaks down artificial borders drawn during colonial times and fosters a sense of shared identity amongst Africans. As an entrepreneur, Kothari said, "I'm proud to be part of a movement that's shaping a brighter future for our continent."

A young farmer and Investor in Ethiopia, Kaleb Moti also told EBC World that this year's harvest is bountiful, but getting it to market has always been a challenge. High tariffs and cumbersome border procedures eat into our profits.

Ethiopia is renowned for its rich, aromatic coffee, but for too long, farmers have struggled to compete in the global market. The AfCFTA promises to change that. With streamlined trade rules and reduced tariffs, Ethiopian coffee will have easier access to millions of African consumers, boosting incomes and creating jobs under the AfCFTA. For example, Hawassa Industrial Park, a state-of-the-art facility designed for export-oriented businesses, is already attracting investment from across the continent. With duty-free access to other African markets, Ethiopian manufacturers can expand their reach and create thousands of new jobs.

The road ahead for the AfCFTA is not without challenges. Complexities of implementation, infrastructure gaps, and entrenched protectionist interests remain hurdles to overcome. But with Ethiopia's unwavering commitment and the collective will of the continent, the AfCFTA has the potential to transform Africa's economic landscape.

Consolidating the aforesaid points, Kothari said, “Of course, there are challenges ahead. Implementing AfCFTA effectively requires overcoming logistical hurdles, building infrastructure, and adapting to new regulations. But the potential benefits for Ethiopian entrepreneurs like us are undeniable. AfCFTA is not just a trade agreement; it's a game-changer that could transform our business and the continent's geo-economic, and geo-business landscape."

To wrap up the AfCFTA is not just about economics; it is about building a stronger, more united Africa. Acting in unison, the states and people of Africa can create a continent that is prosperous, peaceful, and empowered.

 

 


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