Strategic Opportunities for East African Businesses under AfCFTA
East African businesses have a unique opportunity to boost their exports and capture a larger share of the African and global markets through the African Continental Free Trade Area (AfCFTA). According to Adrian Raphael Njau, a trade and policy advisor at the East African Business Council (EABC), identifying products with high export potential and targeting promising markets is essential for regional economic growth. Njau emphasized that increasing value addition to raw materials in sectors like leather, textiles, and edible oil could significantly enhance the region’s competitiveness.
The Importance of Value Addition
Njau highlighted that while EAC Partner States exported raw hides and skins worth $33 million in 2023, they imported $49 million worth of leather goods. Globally, trade in finished leather increased from $57 billion in 2005 to $99 billion in 2024, yet the EAC accounts for less than one per cent of global leather exports. This gap underscores the need for East African countries to invest more in processing and manufacturing to move beyond exporting raw materials.
The EABC, supported by the African Development Bank (AfDB) through the Fund for African Private Sector Assistance (FAPA), is empowering enterprises in the textile, edible oil, and leather sectors. Through initiatives like the Rwanda Business Clinic, businesses are gaining practical knowledge and skills to access AfCFTA markets.
Leveraging the Africa Trade Gateway
As the onboarding agent for the Afreximbank Africa Trade Gateway (ATG), the EABC supports participating companies in joining this pan-African digital trade platform. The ATG connects exporters, importers, financiers, logistics providers, and government agencies, making cross-border trade easier. It offers business-to-business matchmaking, market intelligence, and trade finance solutions.
However, businesses in these sectors face challenges such as low value addition, limited processing capacity, high production costs, skills shortages, regulatory gaps, and limited access to finance. Addressing these issues is crucial for long-term success.
Training and Support for Export Readiness
The Business Clinic provides training on AfCFTA market opportunities, Rules of Origin, tariff concessions, customs procedures, and export requirements. It also offers one-on-one advisory support on market entry strategies and export readiness. These efforts align with the EAC Industrialisation Strategy 2012–2032, which aims to increase local value-added content of resource-based exports and raise intra-regional manufacturing exports.
Untapped Export Opportunities
According to the International Trade Centre’s Export Potential Map, East African businesses have untapped export opportunities worth $298 million for apparel and textiles in South Africa, $63 million for vegetable oils and fats in India, and $17 million for leather products in Uganda. Njau noted that these sectors were selected due to their potential to drive industrialization, strengthen regional value chains, and create jobs.
The Role of Tannery Parks
The government is investing in a tannery park planned for Gicumbi District to boost leather production and reduce reliance on imported processed hides and skins. Once operational, the park is projected to generate $430 million in annual revenue. Beresheba Hakizayezu, a leather goods producer, said the proposed tannery would significantly reduce the cost of raw materials for local manufacturers.
Hakizayezu currently produces about 100 pairs of shoes a month but faces constraints due to limited machinery and high equipment costs. A cutting machine costs around Rwf9 million, while a skiving machine costs approximately Rwf3 million.
Policy Changes and Market Adjustments
In November 2024, Rwanda suspended the 80 per cent development levy on exports of raw hides and skins outside the EAC. The temporary suspension, which will last until November 2026, was prompted by limited demand within the EAC, leading to large stocks of unsold raw hides and skins. This measure aims to provide temporary relief as Rwanda works to establish a domestic leather tanning industry.
