Cosmetics sector wants piece of AfCFTA pie

L’Oréal SA, the local arm of the world’s largest makeup company, has called for cosmetics to be included in the African Continental Free Trade Area (AfCFTA) priority sectors list, saying the harmonisation of standards across the continent will achieve seamless trade.

With negotiations under way, the AU has adopted five priority services sectors — business services, communications, finance, tourism and transport — that member states are negotiating commitments for, such as the level of restrictions, market access and national treatment.

Addressing a stakeholder engagement hosted by the department of trade, industry & competition, the scientific director at L’Oreal SA, Dershana Jackison, said AfCFTA is an important business, regulatory and policy instrument that will shape the cosmetic market of the future.

However, she said the exclusion of cosmetics from the initial priority list was a missed opportunity to realise the maximum potential of the market as the cosmetics sector has the ability to contribute positively to economic growth and development.

“The challenge we see for the cosmetics sector is that it is not included on the priority list for trading as yet,” Jackison. “This is a huge challenge for the industry in terms of benefiting from the levers of AfCFTA.”

SA’s cosmetics and personal care market, including hair and skin care, is valued at an estimated R70bn and L'Oréal SA competes against majors such as Colgate-Palmolive, Unilever, Procter & Gamble and the Estée Lauder group for market share.

According to research hub Mordor Intelligence, the SA cosmetics and personal care products market is projected to register a compound annual growth rate of 6.62% in the next five years.

Jackison said SA is in a position to take advantage of that growth and called on the department of trade, industry & competition to motivate for the cosmetic sector to be prioritised so that the local industry can benefit from AfCFTA.

L’Oréal SA’s manufacturing plant in Midrand is responsible for the production of African Beauty Brands and select Garnier, L’Oréal Elvive and Mixa products that are exported to parts of Africa.

Jackison cautioned that differing standards in each region and fragmented approaches to regulations — unregulated, self-regulated and regulated industry — could pose a challenge for the successful implementation of AfCFTA as increased market access also presented an opportunity for counterfeit goods to be traded.

“We need harmonisation of standards,” she said, emphasising that country-specific regulatory requirements would limit innovation and create barriers to trade. “Liberalised markets may further encourage counterfeit products which are already a problem in Africa.”

She said a technical committee for the cosmetics industry has been set up and is reviewing standards used throughout Africa. In addition, the national implementation committee must consider industry input to maximise business benefits which will contribute to economic growth.

The director of AU and Africa multilateral economic relations at the department of trade, industry & competition, Claudia Furriel, said the African continent was an attractive market for SA’s chemicals, cosmetics, plastics and pharmaceutical sectors if embraced.

Furriel said successful implementation of the AfCFTA agreement is expected to lead to the diversification of exports and increased productive capacity and would encourage innovation and competitiveness, increase employment opportunities and incomes and broaden economic inclusion.

She emphasised that an investment-led trade approach was key to supporting African industrialisation, regional value chains and infrastructure development.

gumedemi@businesslive.co.za