Africa is losing downstream beneficiation opportunities because of its weak manufacturing base. That’s the view of trade integration economist Alistair Tempest who says Africa re-imports 83% of all raw materials exported for manufacturing abroad compared to 17% of products produced, finished and freighted as goods within the continent. It underscores the widely held view that the African Continental Free Trade Area (AcFTA), “is the only solution for Africa”, says the CEO of E-commerce Forum South Africa (Efsa) . Not only will it encourage commerce on the continent to form the world’s biggest common market, with GDP potential of almost $4 trillion garnered through some 1.2 billion people, but hopes are that it will provide the necessary impetus for mercantile momentum. “There is a need for diversity in manufacturing and what people are looking at is the 4th industrial revolution to create better structures for manufacturing and for sales than what we have at the moment. “No longer is it necessary for sales people to travel to African destinations. It can all be done online.” With 54 out of 55 countries on board (Eritrea is only non-signatory), the AcFTA is pretty much a done deal and yet there’s an elephant in the room – trust. “There is a lot of mistrust between African countries. When we go to the World Trade Organisation we find that only some African states like Rwanda, Nigeria, Kenya, Egypt and of course South Africa can afford to send delegates to the (WTO). It builds mistrust.” One way of addressing simmering suspicion, says Tempest, who over the years has made instrumental contributions to EU trade integration, “is through regional economic communities – the RECs”. Some of these, such as the East African Community (EAC) and the Economic Community of West African States, “have done an enormous amount of good work in creating single-market conditions within their own areas”. The EAC for one, Tempest recalls, has cut transport time between land-locked Rwanda and the Port of Mombasa from 18 days to two. “It shows what can be accomplished through instituting initiatives like pre-clearance and the trust required for pre-clearance to work properly.” In comparison, so-called preclearance in the Southern African Development Community results in trucks being stopped at border posts so that Customs officials can go through the pre-clearance documentation. “It adds major delays to overborder transport, meaning that goods travelling between South Africa and the DRC, for example, take weeks to get there when the trip could be completed in under a week.” But building trust and eradicating non-tariff barriers (NTB) is also not just a public sector problem. According to Tempest there is a massive cross- and over-border need for business-to-business (B2B) collaboration but it simply doesn’t exist. “It’s very hard to find B2B partners from different countries in Africa. And where you find these partnerships, which is rare, they are very reluctant to share their information with you.” Tempest says Efsa research found that tariffs per se were actually a minor problem for enhanced intraAfrica trade. “NTBs are really the heavier issues. We have found at least 15 NTBs just in South Africa, and it’s these barriers that need to be removed. The AfCFTA comes with advantages but will only work if African states start talking to each other.”
INSERT: The AfCFTA comes with tremendous advantages but will only work if African states start talking to each other. – Alistair Tempest