‘Govt taking cautious approach on AfCFTA’

Malawi government has reservations on the Africa Continental Free Trade (AfCFTA); hence, is still weighing the costs and benefits of ratifying the trade agreement.

AfCFTA is being championed by the African Union’s (AU) and United Nations Economic Commission for Africa (ECA) with the aim of boosting free movement of goods on the continent.

Ndala: We are analysing the benefits of the continental free trade area

However, principal secretary in the Ministry of Industry, Trade and Tourism Ken Ndala speaking in an interview on Monday said government will ratify the deal once it is fully satisfied that the gains outweigh the losses.

“Most trade agreements have not favoured our country, so on this one, we are taking a cautious approach. We want to assess the benefits first,” he said.

An initial report unveiled in Blantyre on Monday when Ministry of Industry, Trade and Tourism, in partnership with the European Union (EU), held a validation workshop on studies conducted on Malawi’s bilateral and regional trade agreements revealed that the country stands to lose about $11 million a year (K8 billion) in revenue due to the expected liberalisation of tariffs under the AfCFTA.

According to Trade and Development Studies centre director Moses Tekere, who was team leader for the study, there are greater trade and market opportunities that will be born out of the AfCFTA, but there are challenges that Malawi has to take into account because tariffs on imports coming from Africa will be removed.

He explained: “The major conclusion in the study is that there will be some revenue loss of up to $11 million by government and some industries will be affected, but there will also be positive outcomes from the liberalisation process.

“What Malawi needs to do is to take a strategic trade liberalisation, which takes into account the sensitiveness of industries, especially those that need to be afforded some protection before the circles are opened up.”

Malawi is among 33 AU member State signatories yet to ratify the treaty.

 Ndala insists that Malawi needs to first assess how the trade agreement would benefit Malawi before depositing instruments and committing to it.

 “Research shows that there are other countries which we do not trade with; hence, no need to ratify to an agreement for the sake of it,” he said.

Malawi sources imports from 34 of the 55 AU countries and of the 34 countries, 14 of them are not in the trade bloc.

Presently, 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.

The AfCFTA aspires to bring 55 African countries with a combined population of more than 1.2 billion people and a gross domestic product (GDP) of more than $3.4 trillion in one market.

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