Burundi’s adhesion to African Continental Free Trade Area (AfCFTA) jeopardized by poor take-over of trade policy legislation by economic operators, weak quality exports, and inadequate transport facilities while a market worth 1,2 billion might be slumped.
Given of the opportunities that AfCFTA holds including a growing foreign market, a decline in prices of finished products to the benefit of consumers and access of producers to cheaper raw materials as said by Professor Salomon Nsabimana, lecturer at the University of Burundi, and economic expert who presented a study on benefits of AfCFTA on the behalf of Centre For Development and Enterprises Great Lakes.
On these are added “foreign competition that encourages the upgrading of Burundian companies to meet the competition, the expansion of the job market and the geostrategic position of Burundi”, said Nsabimana on the 20th October, 2022 while speaking to journalist after showcasing the study.
The above-mentioned opportunities are hinted by a series of weaknesses and shortcomings among which a lack of trade texts for and by economic entities, the insufficiency and ineffective goods to for exportation. On this is added lack of transport facilities as well as processing and supply chain of exportations.
This is compounded by a poor business climate that is not prone to growth in production, etc. Furthermore, these limitations are also coupled with a series of threats, which, to a slight extent, constitute a bottleneck to the establishment of the AfCFTA
As examples the failure to liberalize trade policies on regional scale, which hinders the development of trade, and foreign competition from Africa associated with the opening of national borders. There is also the loss of customs revenue following free trade but also and above all the effectiveness of free movement and the right of establishment, said Salomon.
As far as exportations are concerned, Burundi exports much more to Asia, Europe and Africa, but Africa stumbles behind rather it exports more outside Africa. If Burundi does not develop exports to African countries, it will not be able to take advantage of this agreement. Burundi will not be able to take an interest in the production of non-traditional products, said the expert.
While speaking after the presentation, CDE-Great Lakes Executive Director Aimable Manirakiza said that in terms of trade, Burundi will be able to take advantage of a market worth 1.2 billion consumers which represents over $2.5 trillion in cumulative GDP.
Via the reduction of trade costs and trade facilitation, the AfCFTA offers Burundian companies an opportunity to take advantage of and contribute to the rapid growth of the African market.
“To reap maximum gains within the AfCFTA, Burundi investors ought to check whether their exports entail adequate upgrades or significant value adjustment,” said Aimable.
This entailed the fact that Burundi had to stimulate its output and increase its exchanges, and to generate an attractive investment environment for domestic and foreign investors, especially through small and medium-sized enterprises, he added.
For him, besides the stakes linked to the diverse exports and products markets, improvement of the level of national firm performance, supply and quality of services infrastructures, and the reinforcement of women and youth entrepreneurial capacities.
“The national ownership of the AfCFTA is of paramount importance to boost the efforts of trade performance improvement and to take full advantage of a continental trade opening on the one hand, and on the other hand the strategies of the AfCFTA implementation in Burundi and its current hindrances,” he added.
The AFCFTA Agreement was signed in March 2018 and entered into force on 01st January 2021. It however, comprises of three protocols which pertain to Trade in goods, trade in services and rules and procedures on the settlement of disputes. It combines all small regional blocks.
Trade under the AfCFTA starts on 01 January 2021 among countries having submitted their market access offers and ratified the Agreement. With regard to trade in goods, upon entry into force of the Agreement, Mauritius would benefit from preferential access on those products whereby the rules of origin exist.
As said the economic expert Nsabimana, Burundi stands or falls on the good fortune of gaining from intra-African trade. The agreement envisages the alleviation of both tariff and non-tariff barriers so that Burundi can exchange freely with other countries.
“Moreover, the agreement also promotes the movements of people, that is. the movement of investments. This allows Burundians to invest in other countries and foreigners to come and invest in Burundi, which is beneficial in both directions,” said the expert.
“A Burundian who goes to invest abroad will bring in his resources, a possibility to have funds coming from abroad through his services. But also, a foreigner who comes to invest in Burundi will develop production, wealth and also create employment,” he concluded.
According to Dr. Salomon, the AfCFTA is expected to be the largest common market in the world in terms of membership since the creation of the World Trade Organization (WTO).
If launched by all 55 states, he said, it will cover more than 1.2 billion people. The United Nations Economic Commission for Africa (UNECA) estimates that AfCFTA could boost intra-African trade by $35 billion by 2022 and increase continental exports by 6 percent.
Burundi joined the AfCFTA Agreement on July 02, 2018 in Nouakchott, Mauritania, whereas it ratified it on June 17, 2021. To date, Burundi has substantial strides forward as a national strategy for the enforcement of the FTAA has been crafted and endorsed.
This independent national plan is part of Burundi’s efforts to improve its trade performance and trade facilitation.
