UNDP supports Uganda to bring the African Continental Free Trade Area (AfCFTA) to life

The Government of Uganda through the Ministry of Trade, Industry and Cooperatives in partnership with the United Nations Development Programme (UNDP) held a three-day dialogue with key stakeholders to discuss opportunities presented by the African Continental Free Trade Area (AfCFTA) and how Government, private sector, development partners and other stakeholders can collaborate to position the country as a fast mover in harnessing opportunities presented by the agreement.

The AfCFTA is projected to raise Africa’s income by 7 percent, lift 30 million people out of extreme poverty, and lift 68 million people out of moderate poverty by 2035. It is also projected to boost intra-African trade by 52.3 percent when import duties and non-tariff barriers are eliminated. Though, there are several challenges and opportunities that Uganda needs to address to harness the potential of the AfCFTA.

The Agreement has been touted as a game changer for economies like Uganda, as it promises larger market opportunities, triggering more trade and investment and allowing greater value addition, export diversification and productivity growth – leading to more and better jobs with greater social inclusion.

The AfCFTA also promises higher intra-regional trade in agri-food products, including from surplus to deficit countries, thereby stabilising food prices and improving food security in Africa. It offers an opportunity to promote socioeconomic transformation and improve competitiveness through regional value chains in manufacturing while improving competitiveness, triggering greater trade and investment in green enterprises, and promoting socioeconomic transformation.

Unlocking the Potential of AfCFTA in Uganda

Under the theme ‘Unlocking the Potential of AfCFTA in Uganda’, the dialogue held at the Kampala Serena hotel as part of the AfCFTA Week activities between 10-12 November 2021, UNDP and partners sought to increase awareness of AfCFTA opportunities for Uganda and identify opportunities for partnership.

Through the targeted activities of four Business Memberships Organizations namely UMA, FSMEU, UNCCI and PSFU, the country office is building capacities among manufacturers, SMEs and members of the national chamber of commerce to prepare them to be export ready into the AfCFTA.  The project is also enhancing the digital platforms for sharing of important trade information around the AfCFTA and

has designed a trade finance facility aimed at addressing key risk-perception challenges that have inhibited lenders from dealing with, especially the SMEs. The facility will also strengthen and widen the array of financing instruments by banks and other financial institutions to facility SMEs trade amongst themselves across the African Continent.

Lastly the facility directly targets women and youths in the manufacturing and export space to assist them identify niche markets for special products such as crafts.

The dialogue was graced by Hon. David Bahati Minister of State for Trade, Industry and Cooperatives (Industry), Hon. Harriet Ntabazi, State Minister for Trade, Ministry of Trade Industry and Cooperatives (Trade), Ms. Geraldine Ssali the Permanent Secretary Ministry of Trade, Industry and Cooperatives, Mr. Wamkele Mene, the AfCFTA Secretary General, the UN Resident Coordinator Ms. Susan Ngongi Namondo, and private sector stakeholders.

Speaking during the dialogue, Hon. Bahati underscored the role of the private sector in spearheading “our effort to take advantage of the opportunities in the AfCFTA.”

The Minister described the AfCFTA as one of the drivers of Africa’s growth and industrialisation agenda. “With a population of 1.3 billion people and a combined GDP of US$$3.4 trillion, the AfCFTA offers the continent, and Uganda, a solid base for a speedy industrialization,” he said.

Fostering recovery from COVID-19

The Minister noted that implemetation of the AfCFTA was timely especially in light of the economic challenges exacerbated by the COVID-19 pandemic, which has adversely impacted global economic growth projections. “The African Continental Free Trade Area provides us an opportunity to further consolidate our resilience and should catalyse our recovery from the impact of COVID-19,” he said.

On her part, Dr. Joy Kategekwa, UNDP Africa Strategic Advisor stressed the need for renewed efforts to create awareness about the AfCFTA and the opportunity it presents, a commitment to support and increase the capacity of entrepreneurs and exporters to meet quality standards needed in the market and sustain supply chains while establishing an enabling infrastructure such as roads and energy.

In agreement, citing the example of Ugandan pineapples touted as being the best in the world, Hon. Ntabazi stressed the need to increase quantity and quality of products and services consistently as well as improve packaging and branding to improve the country’s competitiveness. Hon. Bahati called for renewed efforts toward addressing impediments inhibiting nations from fully harnessing the opportunities presented by the AfCFTA market.

Overcoming hindrances to the AfCFTA dream

Different speakers listed a number of challenges, including high interest rates, unfavorable tax policies, quality standards, poor dispute resolution mechanisms, insecurity, low digitalization levels and inability of key institutions to identify opportunities and linking them to entrepreneurs and limited support to boost quality productions.

AfCFTA Secretary General who made a presentation at the dialogue lauded the government of Uganda for the great strides that have been made towards implementation of the AfCFTA.

On her part, UNDP Resident Representative, Ms. Elsie Attafuah underscored the importance of inter-country trade and cooperation, noting that “Development experience shows that no country has ever achieved rapid economic growth and prosperity without trading with other countries.”

Ms. Attafuah noted that the AfCFTA is an opportunity Uganda cannot afford to lose. “The successful implementation of AfCFTA in Uganda will put us at a new inclusive and sustainable development path by building an industrial value chain and specialization structure based on Uganda’s comparative advantages,” she said.

Africa accounts for just 2.9% of global trade and only about 17% of African exports are intra-continental, compared with 58% for Asia and 65% for Europe. The AfCFTA therefore heralds a new chapter in Africa’s integration and development – one of cooperation through trade to drive economic and structural transformation.

The African Continental Free Trade Area is the world’s largest free trade area which provides an opportunity for countries in Africa to competitively integrate into the global economy, reduce poverty, and promote inclusion. The potential impacts at the household level are also significant.

The third National Development Plan (NDP III) and Vison 2040 identifies Uganda strategic opportunities for positioning to harness the African Continental Free Trade Area. These include: i) a youthful population, the third largest in the World; ii) rapid urbanization; iii) a strong comparative advantage in agriculture and minerals; and iv) a strategic geographical location on the continent which is ideal to position Uganda as trade and logistics hub.

Unlocking AfCFTA Potential

UNDP’s offer is supporting the Ministry of Trade, Industry and Cooperatives to accelerate Uganda’s implementation of the AfCFTA, focusing on awareness raising, enhancing market access opportunities, preparing a National AfCFTA Implementation Strategy, and establishing a catalytic Trade Finance Facility with special focus on small and medium enterprises (SMEs).

The support is also geared towards building local and regional partnerships, both technical and financial, for ensuring more efficient implementation of AfCFTA in Uganda.

This is being done in collaboration with the Ministry of Trade, Industry and Cooperatives and with support from key private sector business support organizations such as the Uganda Manufacturers Association (UMA), Uganda National Chamber of Commerce and Industry (UNCCI), Private Sector Foundation of Uganda (PSFU), Federation of Small and Medium Enterprises of Uganda (FSME-U), the Uganda Small Scale Industries Association (USSIA), among others.