Malawi yet to start trade under AfCFTA

Malawi is yet to start trading under the African Continental Free Trade Area (AfCFTA) two years after the government started courting firms to trade under the $3.4 trillion (about K5.9 quadrillion) market despite having preferential market access in 23 countries. In January 2024, the Ministry of Industrialisation, Business, Trade and Tourism invited expressions of interest from local product and service firms to participate in the AfCFTA Guided Trade Initiative (GTI), a solution-based approach to support the kick-starting of a commercially meaningful trade under the AfCFTA preferences. Under the AfCFTA GTI, Malawi has the opportunity to test the readiness of the private sector to participate in trade under the AfCFTA regime and identify possible future interventions to increase intra-African trade and maximise the benefits of the trade pact.

The prequalified firms were also expected to attend a capacity-building workshop on how to participate in GTI. But in a written response on Friday, Ministry of Industrialisation, Business, Trade and Tourism spokesperson Patrick Botha said only a few local companies are ready to participate in AfCFTA, a market of 1.2 billion people. He said: “We have delayed to actually start pushing our products across the borders in accordance with the agreement, but we are getting there by all means.

“A lot of background work is taking place, including the issue of the Pan- African Payment and Settlement System, a digital platform for instant, cross-border payments in local African currencies, reducing foreign currency dependence.” Botha acknowledged that the AfCFTA remains the biggest game-changer for Africa and a sure gateway to turn the fortunes around. However, the private sector has flagged lack of awareness and a challenging business environment as key deterrents to the country’s implementation of AfCFTA. In an interview on Friday, Malawi Confederation of Chambers of Commerce and Industry chief executive officer Daisy Kambalame said while lack of information is slowing the uptake of the AfCFTA pilot initiative, challenges facing the businesses sector could make the country’s goods and services uncompetitive.

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“Businesses in Malawi are facing a number of challenges, including macroeconomic instability, an unfavourable tax regime, foreign exchange challenges and lack of affordable financing, making Malawian goods and services uncompetitive, which will likely affect our implementation of the AfCFTA agenda,” she said. Meanwhile, a status of negotiations and ratification update published by Trade and Law Centre shows that as at January this year, Malawi can only trade with only 23 member States under the AfCFTA as many other economies have yet to conclude negotiations on tariff concessions and rules of origin. Rules of origin determine which goods qualify for preferential treatment and delays in their finalisation have slowed broader implementation. Under AfCFTA rules, Algeria, Botswana, Cameroon, Egypt, Ethiopia, Ghana, Kenya, Mozambique, Mauritius, Morocco, Namibia Nigeria, Rwanda, Tanzania, Tunisia, South Africa, Eswatini, Lesotho, Burundi, Uganda, Malawi, Seychelles, the Gambia and Zambia can trade under the AfCFTA.

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