Businesses seeking to benefit from tariff preferences under the African Continental Free Trade Area (AfCFTA) will need to assess the origin of their products and meet specific production requirements, according to Didier Bonyeme, Division Head of the Rules of Origin agenda at the AfCFTA Secretariat.
The framework distinguishes between goods wholly obtained in Africa and products made using imported materials that undergo sufficient transformation. The distinction has implications for manufacturers seeking to use African inputs, develop regional supply chains and access preferential treatment in other continental markets.
Bonyeme said rules of origin are intended to ensure that the benefits of the trade agreement accrue to qualifying African products rather than goods that merely pass through the continent.
“The logic is that when the transformation is substantial, it means you are using African power. No, not raw material. Power, labor,” he said during an AfCFTA podcast.
“So you are using African, sometimes you don’t use African materials, but you use African inputs, and you are making and you are moving industrial capacity.”
The comments highlight the distinction between the location of production and the origin of materials. Businesses may use imported inputs and still qualify if their manufacturing activities meet the relevant substantial transformation requirements.
How Manufacturers Can Qualify
Bonyeme outlined five criteria used to assess substantial transformation, including changes in tariff heading and subheading, value-based calculations and process rules.
For businesses using imported materials, the applicable rule depends on the product’s classification under the Harmonised System nomenclature. Appendix 4 contains the product-specific rules that exporters must consult.
“If it’s CTH or CTSH, just make sure that the heading or the subheading of the product is different from the heading or the subheading of the materials,” Bonyeme said.
The criteria can be particularly relevant to manufacturers that source components internationally while carrying out production in Africa.
For example, a business manufacturing footwear using leather imported from Italy and components sourced from Ghana, Cameroon or Nigeria would need to establish which product-specific rule applies and whether its production process meets the required conditions. The podcast discussion did not establish the applicable rule for a specific shoe product.
The framework also includes value-based criteria that measure the contribution of imported materials or the value added to the final product. Bonyeme said manufacturers must calculate the relevant percentages using the required methodology.
SMEs Face Information Challenges
Small and medium-sized enterprises may face difficulties navigating the framework because of limited access to technical information and knowledge of the AfCFTA’s legal instruments.
Bonyeme said some businesses remain unaware of the rules and the tools available to them.
“No, you know, there’s an issue for sometimes for small and medium enterprises, because most of the time they don’t have the correct information,” he said.
“They are not aware of the FCFTA tools and especially FCFTA rules of origin.” According to him, businesses that understand the legal text and can identify their products’ HS codes would be better positioned to determine which rules apply.
“If you are able to use it, it will be easy for you based on the HS code of the product. Your product, the product you are intending to export,” he said.
The process begins with identifying the product’s HS code, consulting Appendix 4 and assessing whether the applicable requirements have been met.
For goods classified as wholly obtained, businesses must establish that the materials used originate within the continent. Where imported materials are used, manufacturers must assess the relevant substantial transformation criteria.
Regional Sourcing and Industrialisation
The rules of origin create a framework for businesses to assess the potential advantages of sourcing inputs from African markets, while also permitting qualifying production using materials from outside the continent.
Bonyeme said the system supports industrialisation by recognising the role of African production, labour and inputs in creating value.
The implications extend beyond tariff savings. Businesses that understand the requirements may be able to evaluate sourcing decisions against the rules applicable to their products, although the commercial benefits will depend on production costs, tariff rates, logistics and market demand.
The harmonisation of the rules across the continent is intended to give exporters a common framework rather than requiring them to navigate different origin requirements in each destination market. For SMEs, the remaining challenge is access to accurate information and the ability to apply the technical rules to their products before entering cross-border trade.
