The AfCFTA Secretariat officially opened in Accra on August 17 2020, although, because of the COVID-19 pandemic, free trading will now begin on January 1 January 2021 instead of the originally scheduled date of July 1 2020.
Ms. Dagnew is eager to take advantage of reduced tariffs and a consolidated market - potential spinoffs from AfCFTA - to expand the operations of her company, BE Kollective that imports Ethiopian coffee to Ghana and exports Ghanaian cocoa to Ethiopia.
“I am hoping to not pay as much as 35 percent tariffs on my goods; I am hoping that soon I can take my value-added cocoa and coffee to African countries without problems of rules of origin. I could then make more profit, expand my business and hire more people,” she says.
Ethiopia is one of the world’s largest coffee producers and Ghana is the world’s second-largest cocoa producer, after Côte d’Ivoire. Ms. Dagnew is particularly attracted to West Africa’s market of 380 million people.
High tariffs and non-tariff barriers such as customs delays and administrative bottlenecks at border posts underscore the challenges facing African traders and at the same time accentuate a strong desire by traders for a free trade zone.
The AfCFTA eliminates tariffs on 90 percent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons.
Ms. Dagnew’s business slowed down in March 2020 just as the pandemic began to rage. As African economies start to slowly open while adjusting to the realities of the pandemic, Ms. Dagnew intends to restart trading soon.
Yet, she frets about other structural challenges to intra-African trade, such as the competition with big global brands that compete on an uneven playing field. For example, BE Kollective, according to Ms. Dagnew, competes with Nescafé, which is imported into Ghana by retailers.
“The problem is that importers of Nescafé from countries in Europe or Asia pay much less tariff than I pay because those countries have favourable trade agreements with African countries,” she stresses. “Therefore, the odds are currently stacked against us intra-African traders.”
Ms. Dagnew is also concerned that countries’ customs services lack adequate information about the AfCFTA.
“Not long ago, I went to the customs service in Ghana and told them I wouldn’t need to pay tariffs at some point because of AfCFTA. They didn’t understand what I was talking about,” she recalls. “There are many traders who have no idea what AfCFTA is all about.”
She recommends a massive information campaign to raise awareness of AfCFTA among customs services, traders and other key actors in countries participating in the free trade area.