African free trade tariff rules should be completed by July-official

JOHANNESBURG (Reuters) - Members of Africa’s new free trade area should complete their tariff reduction schedules and finalise essential rules of origin by July, a senior official with the bloc’s secretariat said on Monday.

Woman walks past trucks waiting in a 10km queue to cross the Kenyan-Ugandan border in the town of Busia, Kenya November 14, 2020. REUTERS/Baz Ratner/File Photo/File Photo

African countries began officially trading under the African Continental Free Trade Area (AfCFTA) on Jan. 1, after months of delays caused by the global coronavirus pandemic.

Experts, however, say full implementation of the deal will likely take years.

Under the agreement establishing the AfCFTA, members must phase out 90% of tariff lines over the next five to 10 years. Another 7% considered sensitive will get more time, while 3% will be allowed to be placed on an exclusion list.

Forty-one of the zone’s 54 member states have submitted tariff reduction schedules.

Meanwhile, the rules of origin - an essential step for determining which products can be subject to tariffs and duties - must also be completed.

During a panel discussion at the Reuters Next conference on Monday, Silver Ojakol, chief of staff at the AfCFTA Secretariat, said nearly 90% of the rules of origin had now been agreed.

“So the remaining 10% must be completed by July this year,” he said. “By the end of June, we should have completed both the tariff scheduling and the rules of origin.”

The AfCFTA aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization.

The World Bank estimates it could lift tens of millions out of poverty by 2035.

But Ojakol said that the remaining obstacles were not simply related to tariff harmonisation.

“The biggest challenge perhaps is infrastructure interconnectivity to ease trading,” he said.

Africa’s poor road and rail links and excessive border bureaucracy will not disappear overnight.

“I do think there are a lot of green shoots, a lot of bright spots on the horizon in terms of investor appetite for infrastructure in Africa,” Fola Fagbule, senior vice-president at the Africa Finance Corporation (AFC), said during the discussion.

The AFC recently secured $250 million in financing from the U.S. Development Finance Corporation to help fund infrastructure projects on the continent.

For more coverage from the Reuters Next conference please click here or To watch Reuters Next live, visit here

Reporting by Joe Bavier; Editing by Alex Richardson