African Tripartite member countries to trade under the new free trade area agreement

The Tripartite Free Trade Area (TFTA) now comprises 14 countries set to trade under the TFTA agreement including Angola, Botswana, Burundi, Egypt, Eswatini, Kenya, Lesotho, Malawi, Namibia, Rwanda, South Africa, Uganda, Zambia and Zimbabwe, accounting for 75% of tripartite GDP.

The East Africa Business Council (EABC) has applauded the commencement of the Tripartite Free Trade Area (TFTA) following the ratification by the Republic of Angola on 25th June 2024.

This according to EABC brings the total number of Instruments of Ratification deposited to 14, meeting the number required for the Agreement to enter into force out of the 29 Member States.

Mr. Adrian Njau, EABC Acting Executive Director, in a statement received on 29th July 2024 said, “Our dream is to see businesses start trading under the TFTA preferential tariff”

Mr. Adrian explained that EAC Partner States trade more with Tripartite member states compared to the rest of Africa due to overlapping membership in SADC and COMESA, where they benefit from preferential tariff treatment. Tanzania and DRC are in SADC, while Kenya, Uganda, Burundi, and Rwanda are in COMESA.

He lauded Burundi, Rwanda, Kenya, and Uganda for ratifying the TFTA agreement and urged the other EAC Partner States of Somalia, DRC, South Sudan and Tanzania to expedite their ratifications to trade under preferential treatment with countries not in the same bloc. He explained for instance Kenya can now export to South Africa under TFTA preferential tariff treatment.  EAC countries should not fear the competition from South Africa and Egypt, as other EAC countries already trade with them under COMESA and SADC.

Intra-African trade is currently less than 20%, and the commencement of the TFTA represents a shift from rhetoric to action.

Mr. Njau noted that EABC, along with COMESA and SADC business councils, formed the African Tripartite Business Council to champion integration of private sector policy proposals into the TFTA in Kigali 2022.

He emphasized that EABC is committed to partnering with development partners to formulate a EAC regional private sector strategy on TFTA. EABC is also dedicated to collaborating with COMESA and SADC business councils to enhance B2B ties, promote value chains of comparative advantage, and improve complementarity in production patterns, EABC is ready to always present private sector proposals to Tripartite Ministerial Council Meetings to accelerate TFTA implementation.

“Addressing competitiveness and supply-side constraints, such as efficiency costs, quantity, quality, and high transport and logistics costs, is important for the EAC to seize the TFTA 800 million markets. Clear sanctions for non-implementation are also central to the success of the TFTA” he said

The TFTA according to the agreement is set to eliminate tariffs on 100% of goods, stimulating economic growth, industrialization, and sustainable development. It complements the AfCFTA, which aims to eliminate tariffs on 90% of goods in a market of over 1.3 billion people.

“It is crucial for the private sector to be knowledgeable about the trade instruments of Rules of Origin, Standards, and the Dispute Settlement Mechanism under the TFTA. Implementation committees of the TFTA should be co-chaired by the private sector” elaborated Mr. Adrian Njau, Ag. Executive Director, EABC.

The Tripartite framework is based on three pillars: Market Integration, which involves trade liberalization through the creation of a Free Trade Area and arrangements for the movement of business persons; Infrastructure Development, which focuses on enhancing connectivity and reducing business costs; and Industrial Development, which aims to create a supportive environment by improving regulatory and legal frameworks, adding value, diversifying industries, increasing productivity and competitiveness, and implementing programs for structural change.

The 29 Tripartite Member States represent 53% of the African Union's membership, more than 60% of continental GDP ($1.88 trillion), and a combined population of 800 million.

Statistics show that Tripartite countries import more than 99% of similar products exported by the EAC, indicating that the EAC has a considerable market opportunity to grow its exports under the TFTA preferential tariff regime, for products such as vegetables, meat, bovine, pasta, among others.

EAC exports to SADC amounted to USD 3.79 billion, while imports totaled USD 3.9 billion. EAC exports to COMESA were USD 6 billion, with imports at USD 4.7 billion, according to the EAC Trade and Investment Report 2022.