Workers in a chili packaging facility. Rwanda is looking to capitalize on the AfCFTA to drive the free trade agenda.
Free Trade Day is annually observed every May 8 and cross-border trade continues to determine the economic growth of every country across the world. This day underscores what the world would look like, without tax and trade barriers.
Marking the Free Trade Day also aims to help encourage people to reflect much on taking advantage to venture into larger commercial areas, in regards to world markets.
Rwanda is an example of free trade on the African continent, being at the forefront at adopting the African Continental Free Trade Area (AfCFTA) treaty and having been selected among the 7 countries for the pilot phase of the AfCFTA.
The government has also made it possible for traders to engage in export and import trade, and making significant strides to ease cross-border trade with countries and through joining other business blocs.
As the concept of Free Trade remains a point of discussion in the modern economic world, what few recent lessons can one borrow from Rwanda and its partners in building free international trade?
Building on trade blocs where Rwanda is a member, starting with the East African Community, the government has endeavoured to establish trade cooperation with neighbouring countries.
Dr. Ngabitsinze says the AfCFTA will play a key role in boosting trade between African countries.
The East African Community has already identified more than 94 products for export; including coffee from Rwanda, tea and batteries from Kenya, spices from Tanzania, leather, automotive products, among others.
In April, Rwanda and Benin signed a bilateral cooperation in Cotonou, during President Paul Kagame’s two-day state visit to the Central African country. It is reported that the deal was aimed to promote trade in agricultural products, industrial cooperation, tourism, removing double taxation, among other initiatives.
Sharing views by the two Heads of State on how to use opportunities within the African Continental Free Trade Area (AfCFTA) was also paramount. AfCFTA looks forward to releasing its purpose for which it was established in 2018, including the reduction of tariffs, among members. Rwanda having signed the AfCFTA treaty March 21, 2018 and being among the first African nations also demonstrates the zeal to engage in international trade.
Rwanda’s Minister of Trade and Industry, Dr. Jean Chrysostom Ngabitsinze, said business plays a crucial role in advancing the implementation of the African Continental Free Trade Area.
During the workshop held by the Common Market for Eastern and Southern Africa (COMESA) secretariat, held in Kigali (April 2023), participants discussed eliminating non-tariff barriers and putting in place focal points across the region, so as to ease trade.
As persistence of non-tariff barriers remains a big challenge among many African countries, easing Intra-COMESA trade is one way to boost free trade among member states.
One would also recall when Rwanda and Mozambique business leaders met to explore ways to enhance investment in their respective countries, during a two-day business forum in March this year.
Rwanda seeks to increase revenue from mineral exports to $ 1,5 billion by the end of 2023. Collaboration in the sector of mining with Mozambique and other countries would therefore pave way for the realisation of this goal.
ICT, Energy, gas and infrastructure development for both countries as also reported having been the purpose for the forum also adds value to easing free trade.
Free trade would ensure access of Rwanda to products to different African markets.
Experts have also argued about Africa’s banks speeding up joining the AfCFTA payment system, which would in turn support borderless trade across the continent. Likewise, the Pan African payment settlement system (PSPSS) is deemed to solve the problem of time factor in trade, if all commercial banks enrolled. Only a few banks in Africa have enrolled, out of the over 500 reported to exist across the continent.
With the launch of the USD 10 billion AfCFTA adjustment Fund in March 2023, support to all initiatives towards boosting intra-Africa trade is much expected. As reported, this would as well support export development, under the Fund for Export Development in Africa (FEDA), serving both public and private sectors.
The ambition to realise trading in 97% of all goods originating in Africa, traded across borders free of any customs duties by 2033 also calls for fast-tracking all processes leading to sustainable free trade.
It should also be noted that Rwanda started offering special freight tariff for AfCFTA traders through the national carrier, RwandAir. The preferential freight tariff for Rwanda exporters under the African Continental Free Trade Area allows them Pay $1.4 per kilogramme, to reinforce priorities of their project Agenda 2063 in Africa.
The 2020 World Bank report estimates that by 2035, real income gains from implementing the AfCFTA agreement could be 7%, or close to $450 billion. This calls for stakeholders to dig much into the benefits of free trade, and understand the world economy better.
