Africa is abuzz with possibilities following the commencement of trading within the African Continental Free Trade Area (AfCFTA) on January 1, 2021. AfCTA creates a single market for goods and services to increase trading among African nations. The excitement generated by AfCFTA crystallizes Africa’s dream to exploit its full potential in trade as one bloc for the progress of its economies, enterprises, and livelihoods.
The African story has often been marred by stories of war, disease, political instability, and corruption. It these stories, by and large, that have led to the continent being derogatively referred to as the dark continent or a 3rd world economy. This perception has been furthered by African countries over relying on or begging for aid in cash or kind from the West for its economic survival and to feed its population. On the flip side, humanitarian aid to Africa persists as an oxymoron considering that Africa is spread over a wealth of natural resources whose raw materials fuel most of the world economies. With 65% of Africa comprising of uncultivated arable land, it is puzzling that Africa is a net importer of food and of agricultural products, despite this agricultural potential.
Africa’s economy is estimated to be worth over USD 2.5T while it commands a paltry 2% of world trade. Most exports outside of the African continent consist of extractive commodities whereas only 40% of intra-African trade are extractive. Through the AfCTA trade initiative, diversity in intra-African trade will encourage a positive shift to more industrial goods as opposed to extractive goods and natural resources.
AfCFTA presents Africa with a new frontier devoid of bottlenecks that hindered Africa’s access to each other and will infact spur intra Africa trade. Currently, intracontinental trade stands at 50% in the United States (US), 60% in Asia and 70% in Europe. Today, it is approximated that only, about 10% of Africa’s trade is within Africa. There is hope that AfCTA will replicate the trading successes in Africa and raise intra africa trade beyond 50%. With this new frontier, it is now possible to imagine, convoys of refrigerated trucks moving over 5,000 kms away, loaded with thousands of litres of fresh milk from Kenya’s dairy highlands delivered to Abuja, Nigeria for homes to enjoy a hot milky cup of tea. With AfCTA, this dream is a possibility not only for trade between the East and West, but across Africa, regardless of location.
The United Nations Economic Commission for Africa (UNECA) estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The tariff and non-tariff barriers have led to Africa’s trade borders being described as ‘too thick for trade’. The multiple customs requirements while at customs clearance as well as sanitary and other regulatory requirements that vary from country to country have often overwhelmed companies trading across various African region and at great expense for successful and profitable trade. AfCTA comes with an assurance of harmonized trade policies, regulations, related infrastructure, finance etc to enable intra Africa trade. The expectation is for a swift, harmonized and smooth clearance and movement of goods.
For trade to happen, people must be allowed to move freely. Nations in continents enjoying the benefits of intra trade have their citizens moving freely within these countries without the need for visas or travel permissions. This ‘liberty’ is also extended in travel while handling foreigners, where tourists to the European Union (EU) require a Schengen visa for them to visit most of the EU countries. A frontier that allows for free movement of people and goods, a frontier that encourages African entrepreneurs to address African needs with African solutions. Ultimately, Africa stands to enjoy the benefit of resolving its challenges as well as making decisions affecting trade as a single bloc. The time is indeed ripe for Africa.