How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
The AfCFTA offers an opportunity for Mauritius to promote good governance both globally and across Africa
PORT LOUIS, Mauritius, May 4, 2021/ -- By Chido Pamela Mafongoya & Veedushi Mooloo
Mauritius, being strategically located between Asia and Africa, praise
itself as having one of the continent’s most stable regulatory
environment. The Mauritius Financial Centre has built a reputation as a
safe, trusted and competitive financial center, which has enabled it to
position itself as the preferred jurisdiction for Foreign Direct
Investments (FDIs) flows to the continent, since the country can serve
both the Francophone and Anglophone Africa.
Mauritius and the other Africa countries are long known for the ties
they share, both politically and economically. Mauritius ranks first in
Africa has also made its way to Africa by being a member to two of the
continent’s most important trade blocs, namely the Southern African
Development Community SADC, and the Common Market for Eastern and
Southern Africa (COMESA). Through these memberships, many foreign
entrepreneurs have set up their businesses in Mauritius to gain from the trade advantages offered.
Apart from SADC and COMESA, Mauritius is now part of the African
Continental Free Trade Area (AFCFTA). Launched on 1 January 2021, the
African Continental Free Trade Area (AfCFTA) is an exciting game changer for African trade. Currently, Africa accounts for only 2% of global
trade and only 17% of African exports are intra-continental, compared
with 59% for Asia and 68% for Europe.
The AfCFTA is the world’s largest free trade area in terms of the number of participating countries since the formation of the World Trade
Organization with all African countries being signatories except for
Eritrea. The main purpose of the agreement is for members to
remove tariffs from 90% of goods, allowing free access to commodities,
goods, and services across the continent. The general objectives of
AfCFTA can be summarized as follows, to:
Create a single market, deepening the economic integration of the continent.Establish a liberalized market through multiple rounds of negotiations.Aid the movement of capital and people, facilitating investment.Move towards the establishment of a future continental customs union.Achieve sustainable and inclusive socio-economic development,
gender equality and structural transformations within member states.Enhance competitiveness of member states within Africa and in the global market.Encourage industrial development through diversification and
regional value chain development, agricultural development, and food
security.
Mauritius has over the years been an offshore gateway to Africa. It has
long been an advocate for developing economic bridges between itself and other African states, leveraging its position as Africa's best place to conduct business as recognized by The World Bank. Through its Global
Business sector, Mauritius has firmly established and promoted itself as a regional hub for facilitating investments on the continent. It is
thus undeniable that AfCFTA will add further to the attractiveness of
Africa as a place to do business. The AfCFTA provides a platform for
Mauritius to contribute significantly to the new African impetus by
making available to investors and businessmen an ecosystem that not only makes it easier for them to do business with Africa, but also enhances
and safeguards their investments.
The AfCFTA also gives Mauritius market access estimated to be as large
as 1.3 billion people across Africa, with a combined gross domestic
product (GDP) of $3.4 trillion which covers most service sectors,
including financial services, telecommunications, ICT, professional
services, construction, and health. The AfCFTA will eventually reach
zero tariffs on most of traded items, boasting trade outside of its
boarders.
The Mauritian economy is a mixed developing economy based on
agriculture, exports, financial services, and tourism. Since the 1980s,
the government of Mauritius has sought to diversify the country's
economy beyond its dependence on just agriculture, particularly sugar
production. In 2018, Mauritius Intra-Africa exports accounted for 23% of Mauritius’ total exports and imports for 13% of total imports.
Mauritius mainly exports textiles to the rest of Africa. Of the top 10
intra-Africa export products five products are items of clothing or
fabric accounting for 30% of Mauritius’ intra-Africa exports for 2018.
The AfCFTA will provide the country access to an African textile market
worth billions of dollars such that the country will be poised to become a major supplier of textile in the African market. The recent 2020 –
2021 budget of the government has announced one measure that can boost
Mauritian exports from the already existing supply capacity to the
region. The plan to set up Mauritius Export Warehouse in Tanzania and
Mozambique will definitely support a number of Domestic Oriented
Industry. Some are already gearing for Tanzania which is a more
immediately obvious market than Mozambique. Mauritius has good potential to export a range of services in the context of the priority services
lines set by the AfCFTA, namely Business services, Financial Services,
Tourism and travel.
Mauritius mainly imports manufactured goods, petroleum products, cars,
packaged medicaments from China, India and South Africa. The AfCFTA
calls for a reduction in tariff in intra- Africa which means there will
be a lower expenditure on importation of the above-mentioned goods from
South Africa. As a result, there will be a reduction in the prices,
reducing the country’s negative balance of trade.
The movement of goods and services amongst African countries will create employment opportunities for citizens in Mauritius. It will provide an
opportunity for entrepreneurs to work together in a liberalized trade
environment. Further, the AfCFTA will strengthen the existing commitment of deepening regional trade integration initiatives under regional
bodies such as the African Union, COMESA and SADC. The geographical
diversification brought about by the AfCFTA is likely to open up new
markets for Mauritius thus boasting its economy.
The AfCFTA offers an opportunity for Mauritius to promote good
governance both globally and across Africa, through the concept of
“Trade Integrity” which is defined as international trade transactions
that are legitimate, transparent and properly priced as a way to ensure
the legitimacy the global trading system. Trade Integrity will provide
investors with more confidence to increase their investments in the
country.
The AfCFTA will also assist to alleviate some of effects brought about
as a result of the COVID-19. The African Development Bank Group’s
African Economic Outlook (AEO) 2020 Supplement estimates that Africa
could suffer GDP losses in 2020 between $145.5 billion (baseline) and
$189.7 billion (worst case), from the pre-COVID–19 GDP estimates.
Further, trade in medical supplies and food has been disrupted. It is
being fully recognized across the continent that AfCFTA presents a
short-term opportunity for countries to “build back better” and cushion
the effects of the pandemic. In the longer-term, the impact will
increase the continent’s resilience to future shocks.
In conclusion diversifying exports, accelerating growth in its trade,
competitively integrating into the global economy, increasing foreign
direct investment, increasing employment opportunities and incomes, and
broadening economic inclusion are just a few of the positive economic
outcomes AfCFTA can bring to Mauritius. Mauritius having undergone a
remarkable economic transformation from a low-income, agriculturally
based economy to a diversified, upper-middle-income country that has
attracted considerable foreign investment should ensure that it fully
takes advantage of the opportunities offered by the AfCFTA.
Authors: Chido Pamela Mafongoya & Veedushi Mooloo, Centurion Law Group
Africa Business News
How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
How can Mauritius take advantage of the African Continental Free Trade Area (AfCFTA)? (By Chido Pamela Mafongoya & Veedushi Mooloo)
Play online games for free at games.easybranches.com
Guest Post Services www.easybranches.com/contribute