Linda Chepkwony sets her sights on the sky. She dreams of becoming Africa鈥檚 first young billionaire. And she wants to help transform the continent鈥檚 economic fortunes.
鈥婽he 30-year-old Kenyan鈥檚 entrepreneurial journey started with the exporting of arts and crafts, duty-free, to the US under the听听鈥� which provides duty-free access to the US market for select goods from certain countries in Africa. 听
However, with the African Continental Free Trade Area (AfCFTA) coming onstream, Linda is shifting her business model to adding value to commodities such as honey and nuts and then exporting them to other African countries.听
The AfCFTA potentially consolidates a market of 1.3 billion with a combined GDP of $3.4 trillion, eliminates tariffs on most goods and services, and guarantees the free movement of labour among participating countries.
The AfCFTA will make business easier and faster, not just for me but for millions of women and youths in Africa. It would be fantastic!
The trade pact seems tailor-made for Linda: she鈥檚 young, an entrepreneur, a woman, and tech-savvy. She dreams of Africa that鈥檚 liberated from the shackles of underdevelopment. She believes young people can lead the charge. And she鈥檚 got a 鈥榗an-do鈥� spirit coupled with a sense of urgency.
Value addition
Linda is the founder and CEO of Kenya-based RiftValley Organics Africa - a company that processes and packages honey, nuts, peanut butter and herbal products and seeds for the domestic market, as well as for other African markets.听
Right now, she鈥檚 preoccupied with value addition.
Her popular products include tea infused with听lemongrass, mint, lemon, ginger, or cinnamon. There is also ginger-infused honey and creamy peanut butter.
Linda sources the raw commodities mostly locally, although she sometimes imports from neighbouring countries.听
鈥淎t times, there is a low season of honey harvesting in Kenya and the demand is high, so I get honey from Tanzania or Uganda to meet the shortfall,鈥� she says.
The challenge, though, is that sometimes what is available in these countries is not the right quality. 鈥淔or example, the nuts might have aflatoxin [certain fungi]. That means we won't have to process them.鈥�
There are a lot of market opportunities in Africa. Most of our countries import agricultural products from the West, yet those products are readily available in Africa.
Unlike traditional trade agreements that focus on trade in goods, services, and intellectual property rights, conceptually, the AfCFTA has a broader goal that includes enlisting the youth and women in Africa's industrialisation effort. From the outset, African leaders demanded a protocol on women and young traders.
Wamkele Mene, the Secretary-General of the AfCFTA Secretariat, told听Africa Renewal听in an earlier听interview听that 鈥淭he reason I put a strong emphasis on young Africans and SMEs led by women is that, first, they are the drivers of the African economy. SMEs run by women account for close to 60 per cent of Africa's GDP, creating about 450 million jobs.鈥澨�
Linda talks about 鈥渢apping into the potential of young people in Africa when it comes to value addition鈥� and that 鈥淎frica must feed itself.鈥澨�
Therefore, she hopes to 鈥渉ave manufacturing and innovation hubs in different African countries where young people can learn about manufacturing technology, about value addition so they can have the right products for the right market.鈥�
Trading under the AfCFTA officially began in January 2021, and, despite teething challenges, Linda feels the continent is on the cusp of a trading transformation.听
鈥淭he AfCFTA will make business easier and faster, not just for me but for millions of women and youths in Africa. It would be fantastic!鈥� she says.
Rules of Origin certificate
Recently, Linda received a Rules of Origin certificate, which brings down tariffs for her products from 35 per cent to 24.5 per cent.听
The AfCFTA's Rules of Origin set out guidelines for tariff preferences for goods that meet the origin rules and are traded within the free trade area.
Kenya has made it very easy to get a Rules of Origin certificate. I got mine in one day.听
The Rules of Origin certificate is important because it shows that my goods originate from Kenya and so qualify for preferential tariff treatment, or cheaper import taxes, within the African Continental Free Trade Area countries.
In Kenya, the Customs and Border Control Department is under the government鈥檚听Kenya Revenue Authority听(KRA). To make it easy to apply for a Rules of Origin Certificate, KRA has established offices in five counties (Nairobi, Mombasa, Nakuru, Uasin Gishu and Kisumu) around the country. Even if you're not in the capital city, Nairobi, you can apply for the certificate in any of those counties.
In my case, I went to the office in Nairobi. I told the officers there that I had come to apply for the Rules of Origin certificate.
They checked the tariffs for my products. Because we are in the nuts and honey business, our rate was typically 35 per cent. They informed me that tariffs on my products would be 24.5 per cent if I got the certificate. The AfCFTA provides that tariff rates for most products go down progressively until 2030 when they are eliminated.听
The officers gave me an application form in which I indicated my products and the export destination country.听
So, once I filled out the form, they checked in their system for the HS [Harmonized System] code for my products. The code is indicated in the Rules of Origin certificate. Each product has a unique HS code.听
I must mention that I received, in advance, some documents from my partners in Ghana, including an invoice. The quantities of products shipped to other countries are in the Rules of Origin certificate to aid the customs officials in Ghana in clearing the goods.听
After that, I paid the equivalent of about $3. The KRA officials then scheduled an inspection of our production facilities as well as the products. This was to confirm that we source raw materials and finish the products in Kenya.听
The officials took samples of our products for a thorough examination. Once confirmed and having paid the $3 dollar charge, I was swiftly given an AfCFTA Rules of Origin certificate and a registration letter as an AfCFTA exporter.听
Countries engaging in the AfCFTA commit to a progressive reduction of up to 90 per cent of tariffs on trade in goods and services by 2030. Therefore, Linda expects a further reduction in tariff on her products by next year, another reduction in 2025, and so on.
She has eagerly seized the opportunity of the听Guided Trade Initiative听to ship a consignment of herbal-infused honey from Kenya to Ghana.听She met her Ghanaian and other partners through opportunities offered by the UN Economic Commission for Africa (UNECA) and the UN Development Programme (UNDP) Africa to participate in various trade events on the continent.
The Guided Trade Initiative allows the trading of certain products among eight countries (Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia) that meet certain criteria, including the deployment of AfCFTA鈥檚 Tariff Book and Rules of Origin Manual and the publication of tariff rates approved by the AfCFTA Secretariat.
鈥淎fter Ghana, I'm targeting Cameroon and then Egypt for our herbal-infused tea,鈥澨齭ays Linda.
She intends to partner with fellow youth to set up production facilities in other countries. She calls that strategy 鈥渃onnection opportunities.鈥�
She explains: 鈥淚f a country has the raw materials that we can add value to, let's say cashew nuts in Ivory Coast, we will empower young people there to do value addition in cashew nuts鈥攃ashew flour, cashew butter, chocolate cashews and roasted cashews.听
鈥淚t will make our work easier. We will fulfill orders in that market without all the logistical hurdles of transporting goods from Kenya to that country. And we will create jobs that help young people improve their livelihoods.鈥�
She insists 鈥淭here are a lot of market opportunities in Africa. Most of our countries import agricultural products from the West, yet those products are readily available in Africa.鈥�
Challenges
Despite her lofty ambition, Linda is under no illusion about the current difficulties facing young entrepreneurs.
First is a lack of access to capital.听
鈥淚t鈥檚 hard for young people to access capital in manufacturing and other sectors. A young business leader starts by doing business intelligence, calculating production costs, break-even points and profits, but they will easily give up without start-up capital,鈥� she says.听
If a country has the raw materials that we can add value to, let's say cashew nuts in Ivory Coast, we will empower young people there to do value addition in cashew nuts鈥攃ashew flour, cashew butter, chocolate cashews and roasted cashews.听It will make our work easier. We will fulfill orders in that market without all the logistical hurdles鈥� and we will create jobs that help young people improve their livelihoods.
Secondly, difficulties in cross-border movement听are also a challenge.听
She recalls: 鈥淩ecently, I was watching a YouTuber who said he had problems going from Togo into his own country Ghana, that he was asked at the border to pay some money.听
鈥淚f going to your home country through a neighboring border post has challenges, how can you even trade?鈥� she questions.
Thirdly, there are logistical challenges confronting SMEs听in Africa.听
鈥淵ou are requested to provide a pile of documents at the border. It鈥檚 a headache. It will discourage young people from doing business,鈥� she says.
Fourthly, with many countries not yet effectively trading under the AfCFTA, Linda maintains that 鈥�tariffs are very high when trading between regional trading blocks. It鈥檚 easier to trade within East Africa than with countries in West Africa.
Fifthly, shipping logistics nightmare.
鈥淭alking about logistics,听shipping within the continent is tough. For some traders, it鈥檚 easier and cheaper to import goods from China than from a neighbouring African country, even if the quality of the goods is the same.鈥�
Sunny outlook
Yet, the AfCFTA aims precisely to tackle Linda鈥檚 concerns that explain why intra-African trade is at a measly听. And the outlook is more sunny than gloomy.
Besides the launch in October 2022 of the Guided Trade Initiative, there is now the听Pan-African Payment and Settlement Systems, the听听and the听.
In January 2023, the AfCFTA Technical Committee on Justice and Legal Affairs finalized the legal scrubbing of the Protocols on Investment, Competition, and Intellectual Property.听
These critical protocols are expected to be approved at the African Union Summit in Addis Ababa, Ethiopia in late February 2023.听
That must be sweet music to the ears of a young entrepreneur like Linda.听
鈥淚t is the young people of Africa who will industrialize the continent through the AfCFTA. And manufacturing and value addition are the key ingredients,鈥� she maintains.
