Implementation of the AfCFTA Agreement will lead to the removal of tariff restrictions on intra-African trade, address some of the non-tariff barriers that have restricted trade between AU Member States and make it easy to situate industrial production in different countries within Africa.
In addition to increasing industrial production, it is expected that there will be a substantial increase in intra-African trade in agriculture, which should lead to improvements in real wages and employment The Agreement will rationalize trade between the different RECs (Regional Economic Communities) and provide for coherence in terms of Africa’s trade with the rest of the world. Free trade within Africa will lead to increased competition, innovation and prosperity for Africa’s people in the long run.
AfCFTA welcomes investment into Africa and encourages internationally based businesses to benefit from the agreement by collaborating with African businesses. Investors must ensure that their production involves sufficient transformation or value-addition in an AfCFTA state Party so as to be considered as ‘originating’ from those AfCFTA countries. The level of value-addition or transformation varies by product as determined by the AfCFTA Rules of Origin. Rules of origin are essentially passports for goods that will be used to identify them as “originating in Africa “
To benefit, the exporter, or the authorized representative, must complete all details required for a complete declaration of the correctness of the application for a Certificate of origin.
The goods must be identified by giving a reasonably full commercial description in order for the appropriate HS Code to be determined.
The signature must not be mechanically reproduced or made with a rubber stamp but can be electronically inserted or replaced with an electronic identifying code in accordance with the national laws of each States Party.
The AfCFTA is targeted at providing tariffs to only goods that are proven to originate in Africa. All countries under the agreement have agreed to a system to exchange information covered by customs corporation annexe of the agreement in advance of arrival. This simply means that customs agencies in each country will have information details of every person and items crossing its borders prior to their arrival. This corporation between Africa’s customs agencies also allows for easy identification of the origin of goods.
The world trade organization certified Harmonized System (HS), will be used by customs to identify the origin of goods as each country undertakes to adopt customs tariffs and statistical classification systems which are in conformity with this harmonized system. The goods must be identified by giving a reasonably full commercial description in order for the appropriate HS Code to be determined. To make sure items are identified correctly as “originating in Africa” the exporter, or the authorized representative, must complete all details required for a complete declaration on the correctness of the application for a Certificate of origin. Imports will also benefit from the tariff-free regime by attracting zero tariffs. To benefit under this agreement, importers must make sure their suppliers are transporting goods that can be identifiable as ‘originating in Africa’.
By granting each other trade preferences, AfCFTA member countries would source more intermediate and final goods among themselves rather than import from abroad. By doing so, more trade would be created within the AfCFTA, serving as a base to support the development of regional value chains and the building of manufacturing capacities in Africa. Trade and industrialization are closely intertwined, as spurring regional integration is likely to boost domestic and regional value addition.
Incentives for businesses
As a foreign investor, there are investment incentives in Nigeria. Some of these incentives cover all sectors, while others are limited to specific sectors. In Nigeria, some of the various investment incentives provided under the relevant laws and regulations include tax holidays; tax credits; capital allowances; investment allowances; tax exemptions; duty drawback; subsidies; export expansion grants; export development funds; double taxation reliefs; and investment promotion and protection agreements, among others.
The African Export-Import Bank (Afreximbank) is the foremost pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.
the Afreximbank Trade Facilitation Programme and other instruments seek to address the lack of access to finance by SMEs;
-There is a $3.5-billion adjustment facility to assist the public and private sector adjust to the new trading regime of the AfCFTA;
-A $500-million Creative Industry Support Fund of the Bank’s Creative Economy strategy;
-The Pan-African Payment and Settlement System