African Continental Free Trade Area (AfCFTA) is African Union’s initiative to eliminate both tariffs and trade barriers across Africa, but what does it imply for SMEs in Africa and particularly with regards to Intellectual Property practices?
MSMEs in Africa
MSMEs, which are the key to economic growth in Africa and account for more than 80% of the businesses, have struggled for a long time to penetrate more advanced markets regionally. It is for this reason that the African Union decided to establish the African Continental Free Trade Area (AfCFTA) in 2012 and became effective under international law in May 2019. It is one of the African Union’s (AU) flagship projects for the implementation of its 2063 Agenda. As of today, 54 out of 55 countries have signed the Agreement and 31 countries have ratified it, Kenya being one of them.
What is the AfCFTA?
The AfCFTA is said to be the world’s largest trade area since the formation of the World Trade Organization covering a market of over 1.2 billion people across all the 55 member states of the African Union. It is so progressive that it eliminates tariffs and trade barriers and creates a single market, making it easier for African businesses to trade within the continent. Trading under AfCFTA commenced on the 1st January 2021, meaning, businesses are now able to supply goods and services to other regional markets and large regional companies. This is a holy grail for MSMEs as they have an opportunity for growth and expansion.
What is its relationship with IP and MSMEs?
With goods and services moving from one country to another within the region, one of the areas that will be critically important is Intellectual Property (IP). IP refers to creations of the mind that are protected by law. It could be an invention, trademark or brand, design, literary and artistic work, trade secret, etc. that a business/individual may own. A lot of businesses in Kenya think that they do not own any IP rights. But in reality, every business has IP rights. These could be the music/video advertisements, posters, designs of the products owned by the business, the brand names, the know-how etc. IP is in everything a business does.
The main objective of IP is to prohibit unauthorized use of people’s creations and reward the creators for their efforts. A strong IP regime protects both the MSMEs and consumers, rewards entrepreneurs, attracts investment, fosters innovation, fosters the transfer of technology and drives competitiveness among MSMEs. This is why Phase II of the negotiations establishing the AfCFTA includes IP Rights. With the AfCFTA agreement, there will be a high level of competition and infringement i.e. counterfeiting and piracy. IP rights are territorial in nature, meaning, if you protected your IP rights here in Kenya, the same protection does not extend to another country. Therefore, for a business to supply its goods and services to another country, it has to ensure that its IP rights are protected in that country. It is imperative for businesses to ensure that their IP rights are protected in places they want to do business. In doing so, they should seek the advice of IP professionals/consultants.
The AfCFTA will include a Protocol on IP that will seek to harmonize IP laws and ensure protection of IP rights under the Agreement. However, IP rights are private rights, therefore, it is up to the IP owner to seek protection and initiate enforcement procedures where the IP is being infringed/used without prior permission. It is best to seek professional assistance from people with expertise in IP to ensure these procedures are properly initiated.
How MSMEs can enhance export opportunities through IP
- Identify the appropriate export market
- Identify the demand for the goods/services
- Take IP issues into account when planning your export strategy
- Look into ways in which IP rights could enhance the competitiveness of your business in the export markets