SMALL to Medium Enterprises in Africa have the potential to contribute over US$2 trillion combined to the Gross Domestic Product under the African Continental Free Trade Area (AfCFTA), a standards and systems certification body for Southern Africa said yesterday.
The new market, created under the AfCFTA agreement is estimated to be as large as 1,3 billion people across Africa with a combined Gross Domestic Product (GDP) of US$3,4 trillion.
Under the AfCFTA, trading began on January 1 this year.
Speaking by telephone, Business Standards and Systems Certification (BSSC) executive director Mr Sabastian Zuze said riding on account that a majority of businesses across Africa are largely Small to Medium Enterprises (SMEs), the coming of board of the AfCFTA sets the tone for them to contribute to the bulk of Africa’s GDP.
“If you look at the US$3,4 trillion and given the fact that in Africa, 70 percent and if not more of businesses fall under the SMEs sector, we are looking at over US$2 trillion GDP contribution coming from the SMEs,” he said.
Mr Zuze said under the AfCFTA the SMEs sector has the potential to contribute the bulk of employment and skills development on the continent.
As a regional standards and systems certification organisation, Mr Zuze said BSSC was coming in to equip SMEs with the knowledge on how to trade successfully in such a big and competitive market.
Presently, the firm has footprints in 13 of the 16 countries in Sadc, operating in countries such as Zimbabwe, South Africa, Botswana, Mozambique, Namibia, and Zambia.
“As BSSC, we are coming in to equip them to be able to trade in such a broader market because the market dynamics are changing.
“The consumer is asking for value added goods for certain type of products and level of standards and systems of assurance for products to get confidence from the consumers,” he said.
Mr Zuze said by virtue of being the world’s biggest market, AfCFTA addresses market share size, which is one of the major limiting factors to trade.
He said BSSC was not only there to assist SMEs conform to standards and systems, but looks at a broader perspective on how enterprises can identify and access the continental market.
“The first thing to understand is that SMEs are going to benefit from the AfCFTA by also accessing a bigger market.
“One of the limiting factors in terms of trade is the size of the market; the bigger the market, the bigger you can grow your business.
“When the market is big, it also means SMEs can manage the risks better. Sometimes there is one market where there is turbulence but in other parts of AfCFTA, a business can actually realise that the markets are performing better so the enterprise is cushioned against risks in the market,” he said.
Mr Zuze said BSSC also assists SMEs with the requirements to penetrate particular markets and trade sustainably so that businesses can get meaningful returns and improve the socio-economic economic levels of African countries.
So far, a total of 36 countries have signed and deposited their instruments of AfCFTA ratification with the African Union Commission chairperson.
Of the 55 AU member states, only Eritrea is yet to join.
Some of the countries from Sadc that have deposited their instrument of ratification, which would pave way for their full participation in the continent-wide market include Mozambique, Malawi, Namibia and Zambia.
Under the AfCFTA agreement, among other prerequisites, member states are required to submit Tariff Offers (schedule of tariff concessions).
The schedule will show the preferential tariffs per year to be applied on imports coming from the African continent, with the aim of eventually eliminating the tariffs and thus promoting intra-African trade.