UNCTAD Secretary-General, Mukhisa Kituyi once said the most secure frontier for African growth driven by trade is Africa itself. Reechoing the significance of intra-African trade as well as tackling the challenges of trade facilitation in the African continent.
Millions of traders across the continent today are incredibly discouraged in the participation of intra-African trade by factors such as unpredictable trade environment, arbitrary tariffs among others. Less than 15% of Africa’s total trade is smothered by robust entry rules making it challenging for traders to move within the regional bloc.
The share of intra-African trade is way below 20% of total export rate. Lower than intra-European trade.
World Regions: Intra-regional Trade (2021)
RECs: Regional Integration indicators scores
The quest to fully implement the 1991 Abuja Treaty which established the African Economic Community to promote continental economic integration influenced the creation of the African Continental Free Trade Agreement (AfCFTA) in January 2021.
So far, 54 party states out of the 55 African Union Member States have signed the Trade Agreement, while 44 countries have submitted their instrument of ratification. But only 4 have ratified the Protocol on the move of people as of January 2023. This agreement was designed in three phases to create a continent-wide market to connect 1.4 billion people across the 55 countries with a combined GDP valued at $3.4 trillion.
“…the agreement is based on preferential treatment which shrouded in the rules of origin. The rule of origin is the blueprint…it is the spirit of agreement. That gives every state party a preferential treatment based upon the schedules of commitments given…” – Louis Yaw Afful (executive director, APN)
What was once a highfalutin ambition but now turned a fledgling action plan will reduce tariffs among signatory states and deal with policies such as trade facilitation. This includes sanitary standards and technical barriers to trade.
But as global economies are seeing a recovery after the COVID-19 pandemic, the establishment of a wide regional market under the AfCFTA arguably is the only ideal trade policy to help African countries diversify their exports (by increasing Africa’s export by $560 billion through manufacturing), accelerate growth, and attract FDIs. This can only be realized if people are able to move freely to trade across borders.
According to the 2022 Economic Development in Africa report, African countries can diversify their economies through boosting exports of high-value services, expanding private businesses’ access to financial services, and implementing effective policies to reduce the tariffs on goods exported to countries within the continent. However, trade barriers in Africa are stifling the efforts of exportation of goods within the continent. This makes it far more expensive to export both primary and refined goods in Africa than in Europe.
Sweet Hub Confectionaries, producer of Cocobyte is a Ghanaian chocolate manufacturing company. It’s been in operations since 2018, exporting locally branded premium chocolates to Europe and less to Africa.
“…if we had a common currency for all of us, it would have been easier. But our currency is valued more than Nigeria. So, when I price in Ghana, and I convert, and go to Nigeria, they feel my chocolates are expensive. But in Europe, the Euro is more higher than the Cedi.”
“…sometimes border restrictions with crossing products…CEPS, immigration is a challenge when exporting products within Africa. I mean on books these hurdles have been cleared but in reality, they still exist. Countries are still very protective of their territories. So sometimes it makes it a little difficult to export.” – Kweku Temeng (co-founder, sweet hub confectionaries)
Some experts are championing a course for a borderless Africa to eliminate arbitrary tariffs serving as barriers.
“I think that the underlying factor for such a call is because of the fact that the Abuja Treaty must be enforced to allow free movement of people and also to ensure the harmonization of immigration rules”
“Geopolitical barriers shouldn’t be an obstacle…the regional economic bloc according to the AfCFTA says that AfCFTA will be built around on existing regional economic bloc. Meaning regional economic blocs have really been factored.” – Louis Yaw Afful (executive director, APN)
This means that, albeit we do not have a single continental market yet, but practicing a Free Trade, the key to regional economic integration is transit and customs cooperation as its critical in the context of the AfCFTA. Surprisingly the establishment of an External Customs Management and Cooperation System does not exist yet. It remains unclear when a regional customs management system will be established as the harmonization of trade rules, single windows at the ports, treaties as well as the dismantling of existing individual customs are yet to be enforced. This poses a sever threat to unrestricted and visa-free movement of goods and people within the continent. Africans are only able to travel without a visa to about 13 out of 55 countries on the continent. Meanwhile, EU nationals can travel free within the European continent unrestricted.
Border management and control
Security threats associated with border control like violent migration, human trafficking, drug smuggling and transnational organized crime have significantly gained the ascendancy. These security threats will and have had an impact on trade facilitation in Africa.
However, there is a nexus between border security and trade facilitation that should be addressed if unrestricted movement of goods and services would be realized.
One of the key areas of trade facilitation is border management and control. Therefore cross-border coordination of government activities within a country and among member states of the AfCFTA is critically important for free and unhindered flow of bloc trade.
“…we have to strike a balance by easing border restriction and maintaining border control. But it’s a difficult balance to strike because transnational criminals will take advantage of it to engage in the smuggling of weapons, drugs… Terrorists can also take advantage of it to establish sleeper cells to recruit more people.”
“…for example, today in Ghana we’re dealing with issues of Fulani’s from Burkina Faso coming through with their cattle. When you look at the ECOWAS principle, they should be able to come in, free movement of trans humans. Meanwhile, it is exposing a security threat to us in Ghana. If we’re not careful in the way we implement it, we might play to the advantage of these organized criminals.” – Adib Saani (foreign policy and security analyst)
Poor border management triggered by conflict can deter the effective actualization of the implementation of the AfCFTA.
State parties would have foster cross-border community centered conflict resolution mechanisms to ensure secure integrated trade relations. Until trade rules under the AfCFTA are duly acknowledged among state parties, and trade policies properly framed to promote an efficient regional trade integration, the ambition to create a single market for the continent’s 1.4 billion people, to boost export diversification, the desire for an intra-African trade will continue to remain a fiction.
By: Joshua Nana Kwame Ayira
Broadcast Journalist / News Anchor / News Producer
GHOne TV & Starr FM (EIB Network)
Source: Ghana/Starrfm.com.gh/103.5FM
