South Africa Joins the AfCFTA Guided Trade Initiative: A Boost for Intra-African Trade

South Africa Joins the AfCFTA Guided Trade Initiative: A Boost for Intra-African Trade

• Commercial
• January 31, 2024

South Africa Joins the AfCFTA Guided Trade Initiative: A Boost for Intra-African Trade

South Africa, an economic powerhouse of the continent, has officially joined the Guided Trade Initiative (GTI) of the African Continental Free Trade Area (AfCFTA). This is a major step forward which paves the way for increased intra-African trade and economic integration. Through this initiative, South Africa not only affirms its readiness to export under the ‘’one African market’’ but also its commitment to receive imports from other GTI countries. In its inaugural AfCFTA consignment, South Africa is exporting locally-produced appliances, grinding materials, paper boards and electrical parts to Ghana and the other GTI countries. South Africa’s inclusion in the GTI also presents a significant opportunity for young entrepreneurs to thrive in intra-African trade.

What is the AfCFTA Guided Trade Initiative?

Launched in October 2022, the GTI is a pilot program designed to jumpstart trading under the AfCFTA. It focuses on a select group of countries and products, with the aim of ironing out any wrinkles and demonstrating the viability of the Agreement Establishing the AfCFTA.

Why is South Africa's participation significant?

South Africa's accession to the GTI is significant for several reasons:

Boosts trade and investment: As one of Africa's most developed economies, South Africa's participation will inject much-needed momentum into intra-African trade and investments. This will create new market opportunities for South African businesses and increase foreign investment into the continent. South Africa’s participation in the GTI will also provide a platform for young entrepreneurs, who represent 25% of MSMEs in South Africa, to flourish in the expanded market.[1]

Showcases commitment to the AfCFTA: South Africa's participation sends a strong signal of its commitment to the AfCFTA and its vision for a more integrated Africa. This could encourage other countries to join the agreement and boost overall participation.

Provides valuable lessons: South Africa's experience with the GTI will provide valuable lessons for other countries on how to implement the AfCFTA effectively. This knowledge sharing can help to smooth the path for wider adoption of the Agreement.

What are the next steps?

Now that South Africa has joined the GTI, the focus will shift to implementation. The government will need to work with businesses and stakeholders to ensure that companies are well-positioned to take advantage of the new or expanded market opportunities. This will involve interventions such as:

Raising awareness of the GTI among businesses: Many South African businesses are not aware of the GTI or how they can participate. The Government will need to launch awareness campaigns to educate businesses about the initiative and its potential benefits. Launching awareness campaigns is crucial, especially among young entrepreneurs, who may not be fully aware of the GTI and the potential benefits it holds for their businesses. Dedicated campaigns targeting the youth, who play a pivotal role in cross-border trade and job creation, will be instrumental.

Simplifying trade procedures: Trade procedures can be complex and cumbersome. The Government will need to streamline these procedures to make it easier for businesses to trade under the AfCFTA.

Building capacity: Some South African businesses lack the capacity to export to other African countries. Training programs and technical advisory services will be required to bridge the gaps.

ICOYACA’s commitment: Additionally, ICOYACA is taking a proactive stance in unlocking information on the AfCFTA for African youth. This includes providing valuable insights to those who stand to benefit from South Africa's inclusion in the GTI.

Conclusion

South Africa's participation in the AfCFTA Guided Trade Initiative marks a positive development with the potential to not only boost intra-African trade and economic integration but also create unprecedented opportunities for the country. As governments, businesses and stakeholders collaborate, the active inclusion of young entrepreneurs becomes pivotal. By empowering and involving the youth in this transformative process, we ensure that the GTI is not just a success, but a catalyst for a more prosperous and inclusive future for Africa.