Importers could lose market share if the African Continental Free Trade Area (AfCTFA) achieves its objective and the continent goes borderless by mid-2020. And although it may take some time before real momentum kicks in as public and private sector interests move closer to scrapping nontariff barriers (NTB), Africa’s import traders will be well advised to consider the threat that revived manufacturing and industrialisation could pose to their profit margins. That’s according to Duncan Bonnett, director at businesson-the-continent consultants, Africa House. Speaking at a Johannesburg Chamber of Commerce and Industry business breakfast recenty, Bonnett recalled how imports had gained ascendancy in the last century when the International Monetary Fund and World Bank imposed “structural adjustment programmes” on African countries. Being forced to liberalise, to lower trade barriers and to end support to domestic industries would have worked if it hadn’t coincided with the massive rise of industrialisation in China. “As a result Africa was flooded with cheap, very competitive products that led to the destruction of many industries on the continent.” Just around Cape Town, where an entire industry had mushroomed during the 20th century as family after family passed their textile businesses on to younger generations, cheap Chinese imports almost overnight wiped out local cloth-making concerns. Bonnett, though, believes that thanks to developments on the continent, particularly through energy resourcing in countries like Mozambique and Uganda and the spinoff opportunities these are expected to unlock, Africa is looking at revitalising local manufacturing. “We’re looking to decrease our dependence on imports through rapidly developing basic industries.” Agri-industrial and mineral processing opportunities were just some of the downstream valueadditions that the continent could expect to see as NTBs were eliminated through the AfCTFA, Bonnett said. He explained that nowhere was this more evident than in the energy sector, especially in how it has fundamentally revolutionised economies. “Here in South Africa we all know very well that without power you don’t produce very much. Obviously the rest of the continent has been saddled with that problem for many years. “But it’s good to see that a lot of the major bilateral and multi-lateral development finance institutions are focusing on the delivery of power into communities and cities.” Re-energising Africa, in a literal sense, applied across the board, he said – for big-ticket investment exercises like hydropower and coal-fired, as well as geothermal and mini-grid solutions. He added telecoms into the equation, and how it has created opportunities right down to the lowest common denominator. “Whether you’re driving around Luanda, Lagos, Lusaka or Nairobi, you are likely to see people by the side of the road selling cell phone vouchers. That person is making five-ten dollars a day.” It means that where previously there was no consumer, there now is one, “an entry-level consumer who is buying goods probably made in a low-cost manufacturing environment. “All of these things is what’s driving Africa today.” And as the continent’s entry-level consumers move up the value-chain, importers of goods into Africa need to figure out where the opportunityshift will be when inbound cargo volumes start dipping as local manufacturers strive to meet increasing demand on home soil.
INSERT: We’re looking to decrease our independence on imports through rapidly developing basic industries. – Duncan Bonnett