Mining & Trade News

Malawi is advancing with preparations to become part of the Africa Continental Free Trade Area (AfCTA) after President Dr. Lazarus Chakwera signed and ratified the AfCFTA instruments on November 1, 2020, which government is now working on depositing with the AU.

The approval of instruments required to operationalize the AfCTA are expected to be signed off by African governments by January 2021 to show their commitment to the trade arrangement.

The AfCFTA is one of Africa’s reform efforts upon realizing trade imbalances with other continents and the subsequent economic loss suffered since the colonization era.

According to Minister of Trade, Sosten Gwengwe, the AfCFTA reinforces the dreams of the founding fathers of the African Union to see a united and more integrated Africa that would ensure that African wealth remains in Africa to benefit the African population.

Among the instruments required to operationalise the AfCFTA include: Rules of Origin that entails laws, regulations and administrative rulings applied by governments to determine the country of origin of goods, services or investments and whether they qualify for a preferential tariff regime.

Through the arrangement, tariff offers shall be applied to scheduled products and time frames within which a country can liberalise its trade in the free trade arrangement. To date, 41 countries and customs unions, including Malawi have submitted their tariff offers.

Gwengwe disclosed that Malawi submitted its initial offer covering 90% tariff liberalisation in November 2019 and the final offer is now ready after being validated by stakeholders, led by the Malawi Confederation Chambers of Commerce and Industries (MCCCI), on November 21, 2020.

“All strategic products and sectors have been designated either under sensitive or excluded list for purposes of liberalization,” said the Minister explaining that the country is at an advanced stage in preparing the National schedule of specific commitments and is expected to submit it before January 1, 2021.

Gwengwe said that another advantage of the AfCFTA is its role to eliminate Non-Tariff Barriers (NTBs) as a way of enhancing and facilitating intra Africa trade.

“The AfCFTA mechanism will facilitate reporting, monitoring and negotiating of the removal of NTBs across regions and the continent as a whole. This facility will provide real time communication on the existence and types of NTBs among all parties to reduce time and cost of cross border trade,” Gwengwe said.

He added; “Although our product offering is primarily classified under sensitive and/or excluded, we still have access to a wider market than before especially to the North, West and Central parts of the continent.”

The minister further disclosed that Malawi will soon launch the National Export Strategy II that will encourage private sector develop competitiveness in niche areas where Malawi can have comparative advantage.

Gwengwe said his ministry, with the help of the United Nations Economic Commission for Africa (UNECA), have formulated a strategy on National Implementation of the AfCFTA to mitigate against any challenges that may arise out of the operation of the trade agreement.

On November 1, 2020, President Dr Lazarus Chakwera signed and ratified the AfCFTA instruments, which government is now working on depositing with the AU.

A total of 54 out of 55 countries have signed the agreement with exception of Eretria. 34 countries have since ratified the agreement.

The AfCFTA is expected to bring together 55 African countries with a combined population of 1.2 billion people including a growing middle class and combined GDP of more than US$3.4 trillion.

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