Malawian SMEs to benefit from Africa Free Trade Area – SMEDI

By Tawina Maluwa

Small and Medium Enterprises Development Institute (SMEDI) has welcomed government’s move to ratify the African Continental Free Trade Area (AFCFTA) saying it has major benefits for Malawian Small and Medium Enterprises (SMEs).

Minister of Trade Sosten Gwengwe announced recently that government is in the process of ratifying AFCFTA which is aimed at boosting trade among African countries.

SMEDI Spokesperson Alinafe Mpoka said SMEs welcome the Trade Area considering vast benefits that will come along with it in terms of easing import and export business between African countries.

“There are major benefits expected to emerge from the CFTA, including boosting trade and welfare gains and fostering a vibrant and resilient African (including Malawian) economic space. These, in turn, will serve as a springboard for more beneficial integration by Africa into the global economy,” Mpoka said.

He explained that  SMEDI’s positive reaction to government’s process of ratifying the Trade Area is based on its mandates which include;establishing a single continental market for goods and services with free movement of business professionals and investments, accelerating the establishment of the Continental Customs Union and the African Customs Union,enhancing competitiveness at the industry and enterprise level by exploiting opportunities for scale production, continental market access and better reallocation of resources.

He said AFCFTA offers many opportunities for developing and promoting SMEs and economic growth in Malawi and Africa as a whole.

Mpoka said: “SMEDI is optimistic that Malawian Small and Medium Enterprises (SMEs) and others from the African continent, will largely benefit from AfCFTA because it will entail lower or no tariffs and free access to market and market information which is vital for startups and established SMEs.”

“We have all the hope that the instrument will indeed lead to removal of tariff restrictions and other barriers on intra-African trade which has been a barrier to many SMEs in Import and Export Business.”

He said with the Trade Area functional, it will also be easier for local SMEs to establish businesses in different African countries.

Mpoka cited Intra-African Trade in agriculture which, he said, is expected to increase, resulting in increase in wages and employment.

The arrangement will also allow businesses to access cheaper raw materials and intermediate goods, and will also improve the conditions of regional value chains and access to global value chains.

Mpoka explained: “SMEDI believes that the AfCFTA agreement will give Malawian SMEs an advantage to grow beyond domestic market into regional one. Other African markets would be much easier for them to enter as opposed to the difficulties they encounter trying to enter the global market.”

“This is of a huge importance bearing in mind that SMEs account for 80 percent of businesses in Malawi and Africa. AfCFTA will also allow SMEs to supply larger regional companies, a feat that is almost impossible without AfCFTA.”

He said Malawi’s AfCFTA ratification and implementation strategy should not only focus on promoting high and sustainable long-term growth but also ensure that the benefits of such growth are widely shared in order to reduce poverty and improve the standard of living for all in Malawi.

If well implemented, the AfCFTA will provide the opportunity for African economies to create the world’s largest free trade area, with the potential to unite 1.3 billion people, in a $2.5 trillion economic bloc and usher in a new era of development.

Meanwhile, SMEDI has also welcomed government’s move to operationalise the Control of Good Act (COGA) saying it will help to control illicit trade.

“This will enable Malawi as a country to find ways to enhance and improve local production, identify high value products and value chains that can be manufactured or grown successfully locally, look at various options, ideas and strategies on how to increase local Product Manufacturing and local Agriculture Production in Malawi so that we become self-sufficient and reduce dependency on Imported Products,” Mpoka said.

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