Small businesses in Kenya are expected to benefit from a Sh110 billion trade facility. This is to improve their market expansion under the African Continental Free Trade Area (AfCFTA).
This is ahead of the planned deployment of a payment facility to facilitate currency convertibility across the continent.
Wamkele Mene, AfCFTA Secretary-General said they were working across the continent with commercial banks to pool funds that would be guaranteed by governments.
“This trade facility will help small and medium-sized enterprises overcome the challenge of access to new markets not because of a lack of expertise, but because of capital,” he said.
Mr. Mene said they are collaborating with Afremixbank to establish a payment facility in six African countries. The collaboration is currently being piloted.
He acknowledged that Africa’s 42 currencies were a constraint to small and medium-sized enterprises. With this facility, they would soon not have to turn into dollars first to transact.
Mr. Mene added that the payment facility will ensure that the cost of transactions is reduced. The reduction will be in relation to currency convertibility when businesses transact in support of AfCTA.
Following the operationalisation of the trade agreement, African SMEs will find new markets for their goods at a preferential rate.
“At the preferential environment, you have a new market for your goods. If you were a trader from Kenya before this agreement and want to export to Angola, you were competing for the same product at the same rate as a European exporter,” he said.
Mene spoke after an awareness forum with the Kenyan private sector and the government on the operationalization of the AfCFTA.
AfCTA was operationalized on January 1 this year with 36 countries so far agreeing to open up their markets.
Trading Under New Rules
“Trading under new rules is a process. And it takes time for governments to put the necessary customs procedures in place,” he said.
By the end of the year, Mene said that most nations will have submitted their ratification papers.
This week, Mene also met with President Uhuru Kenyatta to address the AfCFTA. The agreement, then known as the Continental free trade region, was ratified by Kenya as the first member.
Trade Chief Secretary Johnson Weru said Kenya was ready to host a trade show that would carry the opportunities available under the agreement to global investors.
“Kenya is ready to begin trading under the establishment of the AfCFTA. The private sector and other organizations were also made aware of the possibilities and mechanics of doing business,” he said.
According to the African Union, AfCFTA offers tremendous opportunities for businesses engaged in cross-border trade. AfCFTA will access Africa with a population of 1.2 billion and a total market size of US$2.5 trillion.
Sourced from The Standard