Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has expressed fear that the proposed liberalisation of tariffs under the African Continental Free Trade Area (AfCFTA) will thwart business profitability and eventually crash the country’s economy.
The AfCFTA is a free trade arrangement established among African countries to conduct trade among themselves without charging each other customs duties.
But Malawi Government officials and the United Nations Economic Commission for Africa (Uneca) have downplayed the fears, saying there are mitigating measures being put in place to recoup revenue that will be lost through tariff liberalisation.
This comes as the Ministry of Industry, Trade and Tourism in partnership with Uneca and the African Union Commission (AUC) have organised AfCFTA awareness workshops in Lilongwe and Blantyre targeting the private sector.
In her presentation during the Lilongwe meeting on Tuesday, MCCCI economic analyst Marian Mkomba said while there are greater trade and market opportunities that will be born out of the AfCFTA, there are serious trade risks that need to be addressed before the private sector gives a nod to ratify the agreement.
She said: “The removal of tariffs means businesses will lose revenue in the process and in this regard government should introduce measures that will mitigate revenue losses when the agreement is ratified.
“Apart from the anticipated losses, currently there is no national strategic vision on the AfCFTA implementation plans to achieve the objectives. Government should create a private sector platform for discussion of these issues.”
Ministry of Industry, Trade and Tourism director of trade and AfCFTA chief negotiator for Malawi Christina Chatima assured the private sector that government is taking a holistic approach towards the ratification of the agreement, including measures to address losses from tariff liberalisation.
She acknowledged that tariff liberalisation may indeed lead to loss of revenue, but they are working with the Ministry of Finance, Economic Planning and Development and Malawi Revenue Authority in assessing impact of revenue losses.
“Fortunately, the Afreximbank through this particular agreement provides adjustment facility. Currently, the Ministry of Finance has already applied to the Afreximbank for such support.
“The issue of revenue loss is not something that we should be fearful about, it is something that has been taken into consideration by government,” she said.
Ministry of Industry, Trade and Tourism director of administration and finance Joseph Mkandawire said government was not delaying to ratify the agreement but wants the private sector to own it.
“We are on the right track, government can make a decision just to ratify quickly, but we need to sensitise the private sector because it is the one which will drive this agreement,” he said.
Uneca director for Southern Region Said Adejumobi said he was sure there are fears on competitiveness of local industries in a much liberalised market and the issue of jobs associated with it and government revenue.
He said: “The AfCFTA is a moving train that requires all African countries to come on board. It is a train that will strengthen Africa’s voice, capacity and space in the international economic environment.
“It could shift the balance on the logic of comparative advantage to competitive advantage for many African countries.”
Figures show that 85 percent of goods traded in Africa come from outside the continent and only 15 percent of goods traded in Africa are produced locally.
So far, 54 countries have signed the agreement except one while 27 countries ratified the AfCFTA agreement.