Embracing the Power of African Entrepreneurs: Celebrating MSMEs and Their Impact on Intra-African Trade
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By Tanatsiwa Dambuza
As we commemorate Micro-, Small and Medium-sized Enterprises Day (MSME Day) today, it’s an opportune time to celebrate the extraordinary achievements of Micro, Small, and Medium-sized Enterprises (MSMEs) and their invaluable contributions to African trade and the Sustainable Development Goals (SDGs). These dynamic businesses are the driving force behind job creation, poverty reduction, and economic growth, particularly in developing countries. With MSMEs accounting for up to 90% of businesses, 60% to 70% of employment, and half of global GDP, their significance cannot be overstated.
MSMEs: Catalysts for Intra-African Trade
In Africa, MSMEs play a pivotal role in fostering intra-African trade and regional integration. The African Development Bank (AfDB) reports that these enterprises make up approximately 80% of businesses in the region and contribute around 50% of its Gross Domestic Product (GDP). Thus, the significance of MSMEs in regional economic communities cannot be overstated. According to recent statistics, MSMEs contribute significantly to the intra-regional trade of various Regional Economic Communities (RECs):
- Southern African Development Community (SADC): SMEs account for approximately 70% of the region’s total employment and contribute about 50% of industrial products’ GDP. Intra-SADC trade is dominated by SMEs, with estimates suggesting that they account for up to 90% of all businesses engaged in cross-border trade within the region.
- East African Community (EAC): SMEs contribute to almost 30% of GDP in the EAC region and contribute to over 60% of employment. Intra-EAC trade has witnessed substantial growth, and SMEs play a crucial role in driving this progress.
- Economic Community of West African States (ECOWAS): MSMEs contribute significantly to job creation in the ECOWAS region. In Nigeria, for example, there are 19 million SMEs (over 90% of enterprises), employing 29 million people (about 80%). MSMEs also contribute around 48% to Nigeria’s GDP. Similar trends can be observed in other ECOWAS member states.
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The AfCFTA: Unlocking Opportunities for MSMEs
The African Continental Free Trade Area (AfCFTA) stands as a game-changing initiative that empowers MSMEs to leverage vast opportunities. It is envisaged to create a unified market for goods and services, facilitate the free movement of people and capital, and foster sustainable development and industrialization. The AfCFTA opens doors for MSMEs to access new markets, enhance competitiveness, and diversify their product and service offerings.
Addressing Challenges: Empowering MSMEs for Success
While MSMEs are poised to embrace the opportunities presented by the AfCFTA, they face notable obstacles when participating in intra-African trade. Non-tariff barriers such as limited access to finance, information, technology and a lack of adequate skills create hurdles that must be addressed. To surmount these challenges, collaboration and support from various stakeholders, including governments, regional economic communities (RECs), development partners, private sector associations, and civil society organizations, are essential.
The AfCFTA Guided Trade Initiative (GTI): A Catalyst for MSME Success
The AfCFTA Guided Trade Initiative (GTI) emerges as a groundbreaking program designed to empower MSMEs in their pursuit of intra-African trade. Spearheaded by the AfCFTA Secretariat, the GTI facilitates meaningful trade among countries that have submitted their tariff schedules and rules of origin under the AfCFTA. Through matchmaking businesses and products for export and import, the GTI enables commercially viable trading under the AfCFTA while testing the operational, institutional, legal, and trade policy environments. Additionally, the GTI provides technical assistance and capacity building to MSMEs, ensuring compliance with the AfCFTA rules of origin and other trade requirements.
- Linda Chepkony is the visionary founder and CEO of Kenya based Rift Valley Organics Africa. She pivoted her company into a major player in the processing and packaging of honey, nuts, peanut butter, herbal products, and seeds for the domestic and wider African market. Recently, Linda received a coveted ‘Rules of Origin’ certificate under the GTI, reducing tariffs on her products from 35% to 24.5%, making her one of the first young entrepreneurs to achieve such a feat.
- Jacqueline Tientcheu is the CEO of GIC AFATEX International, her company made history as the first to obtain the AfCFTA Certificate of Origin and export products under the AfCFTA. Jacqueline’s trailblazing company specializes in trading dried safflower, safflower powder, dried pineapple, and honey caramelized ginger tea.
- Florence Tomasia Cousso is a Ghanaian businesswoman who founded Mazia Co., an agribusiness enterprise producing honey, tea, and dried fruits for the Ghanaian market. Her determination and innovation exemplify the spirit of African MSMEs, which is why she is among the first SMEs to obtain the AfCFTA Certificate of Origin.