By Ms. Kyesubire Talitwala-Greigg
For a long time, all I ever heard about intra African trade was wahala (trouble). I heard stories of lost goods, exaggerated prices, misunderstanding, inexplicable duty, lost revenue, high transport costs and so much more. It seemed as if everywhere I turned, I found reasons not to trade in Africa. I opted to leave the whole intra African trade conversation and encouraged all those I knew in trade to go to the global north.
In time as the global pandemic hit and markets and supply routes shut then reopened with limitations, it became clear that we the people of Afrika must learn to trade with each other. We must overcome the barrier to trade within. Intra-African trade is important to the changing fortunes of the African continent.
Currently intra-African trade accounts for only 13% of Africa’s total trade against intra-European Union (EU) trade what stands at 60% and Asia at 50%. As the global north has its own share of economic shifts, there is a reduction in funds available and the African dependence on foreign debt and aid must shift. Governments need different sources of income, and the natural progression should be by increasing intra-African trade that creates revenues for governments and work for the people.
There are a few challenges to Afrikan trade that stand out for me. First are our historical trading patterns. Trade existed in Afrika since the beginning of time but the arrival of colonialism and access to international markets created new opportunities like tea, coffee, sugar, etc. that provided greater profits and demanded greater volumes, so we shifted focus to those and have not changed since. Second, the focus on trading commodities, raw materials, rather than value added products has and continues to limit the Afrikan ability to increase income earned from trade. The third focal point is that as each state has sought to secure her people and borders, we have adopted critical protection measures that have led to complex regulatory requirements.
The fourth element to consider is mindset. It is a common belief that things from outside Afrika is of a higher quality. This of course is fuelled by the reality that some in the past have produced and sold low quality products. The final one I will mention but not the final trade challenge is our disconnected infrastructure. A lot of the Afrikan infrastructure is focused on getting the commodities from the production site to the port and airport but not on the interior or to efficiently connect neighbouring nations. This disconnection rests in the design to take things out as opposed to trade internally. We need to handle the absence of interconnectivity to facilitate trade. This is significant because if we cannot move seamlessly, we cannot trade effectively. Seamless movement means good roads, effective ports and airports. It also means safety on the way and manageable traffic.
A continental free trade agreement is a game changer.
The African Continental Free Trade Agreement (AfCFTA) is an economic cooperation tool championed by the Africa Union for the economic good of the continent. It was founded in 2018, and so far, 54 of the 55 African countries have signed it and it came into force on 30 May 2019 when 24 countries deposited their instruments of ratification. Currently 37 countries have deposited their instruments of ratification and trading kicked off on January 1, 2020. The core intention of AfCFTA is to create a continental market for goods and services that eliminates or at least drastically reduces tariff and non-tariff barriers across the 54 states. This single market will ensure the promotion and the movement of capital and natural persons within the continent in ways that will boost intra-African trade as well as Africa’s trading position in the global market and drive prosperity for all her people.
When we think about the impact, it will change the lives of 1.3 billion people in 55 countries in the world’s youngest continent and circulate 3.4 trillion dollars in GDP. Some critical elements of the change is the reality when complete to raise 30 million people out of extreme poverty. The key thing about moving people out of extreme poverty is that it gives the people hope which fuels creativity and the ability to increase productivity. The other big target of the agreement is to increase exports by at least 560B and improve the balance of trade.
It isn’t always about the complex things rather about finding ways to ensure that the benefits of the AfCFTA trickle down to all the sectors of the people especially those in the lower tiers. The real shift this agreement will bring lies there, in true transformation of the community and not just money in a few pockets.