Uganda is finding it hard to access African markets under the AfCFTA arrangement
It might last a while longer than anticipated before Uganda and other African countries start benefitting from the African Continental Free Trade Agreement (AfCFTA) as new barriers surface.
The agreement took effect in 2019, and trading under it opened on January 1, 2021, but most countries, including Uganda, are yet to effectively fully commence trading.
Focusing on Uganda, in December, the country signed an agreement with Nigeria to export various items under the AfCFTA, including coffee, black and green tea, milk, fish, and pharmaceuticals, with a target quantity of one ton per product. In January, the consignment set off courtesy of the Presidential Advisory Committee of Exports and Industrial Development (PACEID).
However, the goods were blocked from benefiting from the system because Nigeria was yet to gazette the instruments of ratification of the AfCFTA, the last step of the requirements before a country is allowed to trade under it. While the two countries agreed on terms bilaterally for Nigeria to take the products, it was not under the tariff-free agreement.
Richard Okot Okello, the Assistant Commissioner External Trade at the Ministry of Trade, Industry and Cooperatives, said these are some of the details that have not been explained to countries.
The AfCFTA is made up of 55 countries, and 54 have signed up to the agreement while 49 have ratified it. However, only 19 have gazetted the instruments, Nigeria not being one of them.
Okello also said Uganda signed trade deals with Algeria, but the products do not meet some requirements of the Algerian government. These include all food items to be Halal certified, while the package labels should be in the Arabic language. Another challenge was that all the documentation of the agreement was in Arabic.
Also, under the AfCFTA, all companies exporting an item have to be combined into a group because only a country bids to trade, not individual companies. The Commissioner said that as more countries move to fulfill the requirements of the agreement, those seeking to trade with each other have to still negotiate bilaterally.
He was speaking at a symposium in Kampala under the theme, “Unlocking the AfCFTA’s Potential: Driving Economic Transformation through the Coffee Value Chain,” aimed at chatting ways to maintain or expand Uganda’s coffee exports amidst the changing export market dynamics.
“The EU’s strict packaging and quality standards aren’t just about product safety, they are designed to keep value-added coffee processing in Europe,” Okello said, adding, “The real money is in processed coffee, and Uganda must take control by investing in local production”.
Coffee industry leaders are worried that with less than 300 days left for the European Union Regulations on Deforestation (EUDR) to take effect, Uganda might not be ready by then and could lose the market that takes 60 percent of its coffee.
Jane Nalunga, Executive Director of SEATINI Uganda, said the government will be making a mistake if it leaves the responsibility to the private sector, saying it is high time it started getting more involved in business again. “The private sector cannot do trade without government support, otherwise, multinationals will take over the business sector, including the benefits of AfCFTA because they have the capacity,” she said.
She said the requirements of the EUDR are not easy to meet by the coffee growers, hence the risk that Uganda’s exports will be affected. This was supported by Joseph Nkandu, the Executive Director of NUCAFE (National Union of Coffee Agribusinesses and Farm Enterprises). “Uganda has built coffee infrastructure, but most facilities operate below 30 percent capacity due to lack of capital. While multinationals who have cheap foreign capital, take all the green coffee, local entrepreneurs are left behind”.
He said the roles of the defunct Coffee Marketing Board, Lint Marketing Board, and Produce Marketing Board never stopped at marketing, but research, financing, technical advice, and post-harvest handling, among others. “Liberalization alone won’t fix Uganda’s coffee sector. Free markets do not automatically lead to fair opportunities,” he said, adding, “Even global powers intervene to protect their industries. Africa must do the same and implement policies that support local processors.”
He, however, said that the bigger market for Uganda’s coffee would be the local consumption if only a few more Ugandans started taking coffee, especially locally made. Reports have indicated that if Uganda’s increased coffee consumption by just 10 percent, it would add 2.5 Billion Dollars to the country’s earnings.
SEATINI also urged the country to stop priding in the volumes of coffee exported annually but focus on adding value to get finished products like instant coffee cosmetics and others. “To truly benefit from AfCFTA, we must shift to value-added coffee products and maximize our market potential,” said Herbert Kafeero, Programs and Communications Manager.
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