January 2021 marked a historic event for African economic development –the launching of free trading under the African Continental Free Trade Area (AfCFTA).
The agreement promotes socio-economic growth and development in Africa through liberalised trade processes and structures. So far, the 54 African countries have signed the agreement, resulting in immense potential for the growth of trade between African countries. In fact, it has been hailed as perhaps the “most ambitious free trade project since the creation of the World Trade Organization itself” by Martyn Davies, the managing director of Emerging Markets at Deloitte Africa.
The question is, are African countries harnessing this potential offered by the AfCFTA?
According to the African Development Bank (AfDB), intra-Africa exports amount to only 16.6% of total trade.
Lwazi Mboyi, the Acting CEO of the Southern African Cross-Border Road Transport Agency (C-BRTA), says there is a need for strategic partnerships between regional and corridor-based institutions, trade and transport stakeholders (such as the Cross-Border Road Transport Regulators Forum – a regional forum of regulatory authorities) and related bodies. This would leverage collaborative efforts towards resolving the bottlenecks affecting cross-border transport and regional trade.
“It is imperative that we decisively deal with operational constraints and Non-Tariff Barriers which negatively affect the performance of the cross-border transport system and in the corridors linking the COMESA-EAC-SADC tripartite and beyond,” said Mr. Mboyi. He added: “As we do this, we must aim to ensure that cross-border road transport operations are underpinned by firstly, a harmonised regulatory environment and secondly; a predictable operating environment.”.
The reality is that it’s not just policies and procedural shortcomings that have resulted in limited cross-border trade volumes in Africa. We have to look deeper into why intra-African trade has been slow to gain traction, leading to Africa’s ongoing heavy reliance on foreign imports.
The unfortunate truth is that African countries don’t always view their counterparts on the continent in a favourable light. This is due various reasons such as historical conflicts between countries or regions, as well as poor political and trade relationships. There are also negative perceptions about doing business in Africa, including lack of basic infrastructure for trade, not living up to global quality standards, having weak governance structures and simply not being a viable choice for successful business operations.
While some of these views do hold some merit (especially in terms of past trade environments), a lot has changed over the last decade. Many African countries have continually, and consistently enhanced and improved their systems and processes relating to trade and economic development.
Sadly, negative perceptions have not always shifted in line with these positive changes and advancements despite data and projections showing huge potential for such countries, and the continent as a whole. This lack of recognition of socio-economic growth indicators negatively impacts intra-African trade.
Stimulating trade
To stimulate intra-African trade, we need to understand the current limitations and opportunities on the continent. There is need to change the narrative about Africa. The narrative needs to be future-forward and reflective of where the continent is headed.
For transformation to truly happen in Africa, we need the buy-in and support of all stakeholders, not just government and policymakers.
Private sector needs to be open to the conversation of doing more and more business on the continent and explore local partnerships to an exponentially larger extent.
However, for this to work, stakeholders and decision-makers need to be committed to tangibly improving trade and development in Africa in terms of raising the bar when it comes to excellence, service delivery, infrastructure, ethical business practice, policies and other related factors.
According to a 2021 white paper released by the World Economic Forum (in collaboration with Deloitte), the current insufficient and inert interlinkages between African economies have exacerbated the impact of the COVID-19 pandemic on the continent’s supply chains.
The report states that “the continent can do little to counter the global forces inclining towards deglobalization, but it can itself embrace a self-supportive regionalism through enhanced intra-African trade, not to mention promoting Africa as an enhanced destination for investment from multinationals”.
Communication is key
In order to successfully boost intra-African economic trade, we need to put in a lot of work to improve trade, development and business systems that promote trade across the continent.
Most importantly, we also have to communicate effectively in order to get the message across and really change the narrative. To achieve this, we need more open channels of communication and dialogue regarding connecting African businesses and organisations to each other. Platforms such as webinars, round-table discussions, cross-border trade shows such as the upcoming 2021 Intra-African Trade Fair in Durban, South Africa this November, and networking events are effective ways to stimulate interaction that leads to collaboration.
In fact, we all as players within the African economic eco-systems need to be “ambassadors” when it comes to brand building for the continent. Such an approach will benefit businesses, countries, and Africa as a whole – and this “bigger picture” vision is what will move the continent forward in a very intentional and tangible manner.
This communication process should be a productive cycle – make positive changes, communicate about these changes, this then leads to more positive shifts in perceptions, which comes back again to more positive changes.
The bottom line is that, as Africans, we need to take more responsibility for how we see each other, and how others see us. Let us all rise to the challenge, using the AfCFTA as a springboard to stimulate business relations with our African counterparts. Africa’s time is now, so let’s make it happen – together.
Ms. Matsena is the founder and CEO of 1Africa Consulting, a South African-based strategic communications and business solutions agency.
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