By Likeleli Monyamane
In December 2021, I moderated a discussion by the Basotho Enterprise Corporation (BEDCO), titled “entrepreneurship policies in Lesotho through a gender lens.” The topic was to tackle how Lesotho can reduce the barriers that create gender inequality in entrepreneurship and create a more enabling environment for women entrepreneurs to participate. In the discussion, the African Continental Free Trade Area (AfCFTA) agreement came up as part of the organization. The question posed at the event, which is the subject of our discussion today, is “how are Basotho entrepreneurs ensuring that they are ready to benefit from AfCFTA?”.
What’s AfCFTA?
AfCTA is a trade pact between African countries that aims to create a single market for goods and services to deepen the economic integration of Africa (Thomas, 2022).
The focus areas of AfCFTA are the reduction of tariffs among member states, and it covers policy areas such as trade facilitation services and regulatory measures such as sanitary standards and technical trade barriers.
According to a report by the World Bank Group, AfCFTA promises to economically benefit African states in some of the following ways if fully implemented:
- Lift 30 million Africans out of extreme poverty,
- Boost wages for unskilled and skilled workers by 10.3% and 9.8%, respectively.
- Increase Africa’s manufacturing exports by $560 billion.
Why AfCFTA is beneficial for those looking to do business in Africa:
- AfCFTA will create the largest free trade area globally, and all member countries will benefit from free trade in this area.
- Lowering of costs for consumers and producers
- Reduction of administrative red tape
- Reduction of compliance costs
Are we ready for AfCFTA?
In the past, Lesotho has been one of the top African countries to benefit from the United States’ Africa Growth and Opportunities Act (AGOA). Through AGOA, the US …… After more than 14 years of participating in AGOA, Lesotho established one of the most significant textiles and garment manufacturing industries in Sub-Saharan Africa. An outstanding achievement, considering the industry’s impact on employment in Lesotho and the employment of women. However, in all its years of participation in AGOA, Lesotho still hasn’t scratched the surface in benefiting in full from AGOA. Challenges identified in our inability to benefit include supply chain constraints, lack of managerial and technical skills, and poor infrastructure (GOL, 2015). Additionally, as one of Lesotho’s leading investors in the manufacturing industry – Teboho Kobeli – has lamented over the years, Lesotho’s inability to ensure that the manufacturing sector is owned by local businesspeople instead of being dominated by foreign nationals is one of Lesotho’s failures to take advantage of AGOA. Our success in implementing AGOA depended mainly on Chinese and Taiwanese-owned firms and not on local or governmental investment.
If AGOA’s success is anything to go by, it is clear that we can benefit from trade agreements such as AGOA and AfCFTA. However, it is also clear that going into AfCFTA, we need to be more intentional about our approach so that Basotho entrepreneurs can benefit at the maximum level.
In a 2020 report by the Afro Champions Initiative that assessed African governments’ readiness for AfCFTA, Lesotho was ranked 35th out of 55 states to implement AfCFTA. This means we still have a long way to go in being ready.
So how can Basotho entrepreneurs prepare for AfCFTA?
Entrepreneurs need to ensure that they have a clear strategy of how their businesses are going to benefit from AfCFTA by answering some of the following questions:
- Which countries can provide quality production inputs for your business, and how can you start developing relationships with suppliers in those countries?
- What other materials can you use to improve the quality of your products and services that AfCFTA will provide you access which you may not have had in the past? How can you ready yourself to access those materials once AfCFTA comes into effect?
- What skills are available in other African countries that can benefit your company’s growth that you may currently not have access to?
- In what ways can you think about reaching markets that you’ve always wanted to reach but couldn’t? How can you start engaging and advertising your products and services and developing relationships with distribution channels in those markets to understand the market needs, create visibility of your product, and position yourself for growth once AfCFTA comes into effect?
- How can you use technology to position yourself for success?
It goes without saying that for Basotho entrepreneurs to reap the benefits of AfCFTA truly, there needs to be great effort applied into making the policy changes necessary at the national and continental level and putting in place trade facilitation measures. There also must be great advocacy to sensitise all Basotho people on the potential benefits and risks of AfCFTA and to ensure that they are ready to make the best of the opportunities and manage the risks adequately.
