Will the Continental Free Trade Area (CFTA) Give Rise to a New Ear in the Agribusiness Industry of East Africa?

The Continental Free Trade Area (CFTA) is poised to usher in a new era of rapid industrialization, and meteoric economic growth in East Africa. Although there are palpable concerns about tariff revenue losses and irregular access to potential benefits, the new trade agreement holds vast compelling potentials for the growth of East Africa’s agribusiness industry.

The Potentials Which the New Trade Agreement Holds for the Agribusiness Industry

Agribusiness is the mainstay of East African economies. The industry has at different points in history brought about the rise of economic powerhouses on the global stage. It holds similar potentials for East African economies today. Already, agribusiness contributes to an average of over 30% of GDP in the region’s nations and provides the majority of opportunities for employment and export in the region.

An expansion in the industry is bound to generate a tremendous impact on the national economies in the region, creating jobs and empowering the upliftment of millions of rural inhabitants above the poverty line. Agribusiness in East Africa also plays a critical role in the supply chain of East Africa’s food market.

The CFTA will undoubtedly amplify the significance of the agribusiness industry in the continent’s economic welfare. With the expansion of trade links and more efficient coordination of trade activities between various stakeholders in the industry, the benefits of the new trade agreement will have a significant impact on the value chain of the industry. The agreement will bring about a growth-inducing regulatory environment that will stimulate both the public and private sector investment in production, processing and exporting facets of the Agribusiness. As a result, this new regulatory environment will boost food production, enhance the attractiveness and lucrativeness of agribusinesses, create more jobs, and ultimately fast-track the growth of the region’s national economies.

CTFA will improve access to farm inventory and product variety by reducing the cost of trade and encouraging competitiveness in the industry. And with growing demand from the continent’s booming population, smallholder farmers and other stakeholders in the agribusiness industry will be able to leverage on the economies of scale through the new trade liberalization agreement. The enabling regulatory environment will also encourage competition among enterprises across all levels, and this will bring about an expansion of available product ranges. Albeit, the deal does not guarantee a level playing field for all, as the larger enterprises may continue to have the upper hand in the markets.

Nonetheless, the new trade liberalization deal will proliferate the availability of technologies and advanced skills, and this will bring about better farming practices and improved production rates across scales. But in order to boost the global competitiveness of East African producers and exporters, the East African Community (EAC) is looking to adopt global best standards and conformity assessments as non-tariff barriers (NTBs).

The Telling Impacts Which The New Deal is Already Generating

As the trade liberalization is being rolled out, the resulting impact has already registered in several monitoring and evaluation indices. The World Bank’s World Development Indicator shows that the time taken to import goods has reduced from 36 to 31 days and the time taken to export has reduced from 33 to 26 days since the new deal was implemented. The Standards Harmonization and Conformity programme in East Africa show 59% reduction in testing cost, and 74% reduction in average testing time and this has led to a significant increase in the number of products that comply with quality and standard requirements. As a result, EAC trade values and values increased by over 50%.