Deepening intra-African trade

By Antony Mutunga

Increasing intra-African trade does not mean doing less business with the rest of the world. On the contrary, as we trade more among ourselves, African firms will become bigger, more specialised, and more competitive internationally. From now on, the clear wish of everyone is that consultation between business and political leadership, at all levels, and becomes a continuous feature of continental deliberations. – Paul Kagame

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Many years after colonisation, African countries continue to be dependent on their colonial masters. This dependence is as a result of foreign – often given advanced with preconditions – which many countries on the continent continue to enjoy. Whereas some of the programmes initiated or sponsored by foreign countries have some visible benefits, it baffles that African countries continue to trade their sovereignty for what are essentially morsels, instead of embarking on enabling programmes to enable them become economically self-reliant.

This dependence is one of the reasons trade between African countries accounts for such a low percentage of total trade. Besides the dependence, many African states are also victims of their own competitive policies, manifested by way of trade and nontrade barriers. In addition, a lack of proper infrastructure, for example in the transport sector, has led to high average transport costs when compared to other continents.

According to the Afreximbank 2018 African trade report, intra-African remains at a low of 15 percent as compared to Europe where it stands at 68% of total trade. Asia has 51 percent, North America 37 and Latin America’s 20.

In a bid to increase the percentage of intra regional trade and promote unity, African states came up with the Continental Free Trade Area (CFTA) to establish free trade among all the states in the continent. The CFTA is to bring about the world’s largest single market which in turn will effectively boost intra-African trade by about 50 percent. 

It is expected that once intra regional trade picks up, if it is combined with good governance and political stability, then Africa will see a change in terms of increased employment, job opportunities, poverty reduction, increased foreign direct investment, industrial development and economic growth.

As of July 2018, 49 countries had signed the treaty and six – Ghana, Kenya, Rwanda, Niger, Chad, and eSwatini (former Swaziland) – had already ratified it. For the CFTA to come into force, at least 22 countries have to ratify the treaty. 

According to Seth Kwizera, the co-ordinator of think tank Economic Policy and Research Network, Europe and Asia have continued to exploit the continent because of Africa’s reluctance to tap into intra regional trade. He believes that when the CFTA is implemented, this will change. “Once the CFTA is in force and the major barriers to regional trade are eliminated, liberal trade will start across the continent, which will give a stronger voice to countries and regions when dealing with global economic powers.”

To prepare for the implementation of the CFTA treaty and promote intra regional trade, during the African Union Heads of State and Government Summit in Kigali, the African union in conjunction with Afreximbank and the government of Egypt signed an agreement to host the first-ever Intra African Trade Fair (IATF) in Cairo in December 2018. The fair will provide a platform that will allow buyers and sellers as well as investors and countries to meet, share trade, investment and marketing information as well as enter into deals.

Additionally, the meet will bring together a number of continental and global players to showcase their goods and services as well as identify business and investment opportunities in Africa. The fair will also be a way of identifying other solutions towards the challenges affecting intra-African trade.

Meanwhile, several engagement sessions are being held to analyse and explore the various challenges and opportunities that different countries face in terms of intra-African trade. The challenges noted include tariffs, quality, logistics and infrastructure, among others. the biggest, however, is a lack of relevant trade information. This has greatly affected intra-African trade as without the right information many deals end up breaking down. However, with the IATF around the corner, this is about to change.

According to Amr Kamel, the IATF 2018 will be establishing a virtual trade information portal, which attendees and people outside of the event can access after the fair has concluded. This will be a major strategic intervention to address the information gap on the continent when it comes to intra-African trade.

The road towards deepening intra-African trade is on the right track. But more needs to be done. For instance, while the CFTA is expected to increase intra-African trade, policies are needed to ensure that no one country benefits more than the other. All members must unite and work to facilitate increased economic growth for the continent as a whole.  (