Bearing in mind that Mzansi is a major exporter of food products to the rest of the continent, there can be no doubt that the African Continental Free Trade Agreement (AfCFTA) will boost local farmers.
This is the view of Dr Sifiso Ntombela, chief economist of the National Agricultural Marketing Council (NAMC), about AfCFTA, which came into effect on 1 January 2021.
The agreement, he believes, presents an opportunity to boost intra-African trade and farmers will benefit from new open-trade opportunities.
AfCFTA was endorsed by 54 of the 55 African Union member states, including South Africa.
It will work towards a continental customs union which could eliminate tariffs on 90% of intra-Africa goods.
Also, it will aid in the movement of capital and people between countries, facilitate external investment and reduce non-tariff barriers, like the time it takes goods to pass through customs.
Ntombela indicates, however, that for such opportunities to materialise, all African states must invest in removing non-tariff barriers that constrains trade.
Key challenges in Africa
The exportation of perishable food products requires efficient cold chains.
However, the weakness of logistical infrastructure and trade facilitation capacity will likely limit the business opportunities offered by AfCFTA.
Trade, industry, and competition minister Ebrahim Patel called on South African farmers and manufacturers to gear up for the new opportunities in export markets.
“Trade with the rest of the continent is a critical source of output and jobs growth. African countries recognise that industrialisation is critical to the development of the continent,” he says.
The new agreement would take some time to become fully operational, but had the potential to be transformative for Africa, breaking the “dependence on a neo-colonial pattern of trade that characterised trade”.
“Our continent exports raw materials and imports finished goods, with substantial value added in the process,” believes Patel.
Theo Venter, an independent political analyst, believes AfCFTA is a supporting mechanism for the entire Southern Africa to which farmers make a great contribution.
However, he believes Mzansi farmers will, most likely, benefit much more from this agreement because they indirectly support the sub-continent.
Meanwhile South Africa is also under a new agreement signed between the UK and members of the Southern African Customs Union (SACU). This includes South Africa, Lesotho, eSwatini, Botswana, Namibia, and Mozambique.
It aims to replicate the effects of the former partnership of the Southern African Development Community and Economic Partnership Agreement (EPA) with the EU.
This promotes market access through duty free imports of certain products to EU countries.
Venter says under this agreement South African farmers will be able to continue trading with Britain despite Brexit.
“South Africa is one of the biggest suppliers of food and wine to Britain. It will be to the advantage of farmers and the farming community.”
minister Ebrahim Patel called on South African farmers to gear up for new opportunities in export markets.
Ntombela indicates that under the SACU agreement the country’s farmers are expected to continue trading with the UK as the new EPA solidifies the strong trade and investments partnerships.
Boost for wine producers
Food For Mzansi earlier reported that the wine industry would be able to export close to 71.5 million litres of wine tariff free to the UK in 2021 despite the UK’s exit from the European Union.
Michael Mokhoro, stakeholder manager of Vinpro, says the tariff-free quota for imports of South African wine into the UK will apply to 30% bulk and 70% packaged wine. This is set to increase annually by 656 580 litres.