FORTY-NINE of Africa’s 55 countries have signed the framework for the African Continental Free Trade Agreement (AfCFTA) to create a single continental market for goods and services, with free and unfettered movement of businesspeople and investments. When at least 22 countries ratify it, the AfCFTA will officially come into force, potentially making the continent the largest trading bloc in the world.
For Namibia and Africa, a clear determination to expand trade is an important step. Uncertainties in international trade increase the premium on regional intra-African trade. What we have learned from the rest of the world is that even if there is populist protectionism, it is a short-term phase that we’ll ride out. But for Africa to learn from the experience of East Asia and Latin America even as we wait for protectionism to end, we must build productive trading capacities through regional value chains.
Africa trading among its component states strengthens its ability to trade. The experiences gained from that will deliver a greater market share internationally. Africa needs to build the capacity and structural transformation necessary to be a competitive international player.
The creation of a continent with a free trade area is therefore an important step towards building, collectively, the competitiveness of African labour and African products internally and internationally.
Notably, one of the main challenges to intra-African trade is the non-tariff barriers. When there is a deficit of political goodwill, excuses are made to slow down trade. Many times, traders will reach the border and be told, “This product looks too old to be sold to us” or “The quality doesn’t seem to be right,” or “We cannot ascertain that this was made in your country.”
The absence of goodwill leads to the use of too many nontariff measures as excuses to slow down trade. Cultivating goodwill requires that nontariff barriers are rolled back and trade is increased between African countries.
All studies show that what Africa sells within Africa has more value added than what Africa sells to the rest of the world, which are mostly raw materials. That means intra-African trade creates more employment in the source country than Africa trading with the rest of the world. We look to gain more industrial and value-added jobs in Africa because of intra-African trade. Secondly, it will build competitiveness, which you can then unleash onto the rest of the world. Thirdly, we will be removing domestic market distortions, which have been adding a burden to domestic consumers because of too much protectionism.
It must also be noted that Africans have a phenomenal potential for intra-continental trade. Similarly, trade is not static. There is no law that says that a country like Tanzania, for example, must only trade in a certain set of products. Countries will always build capacities and opportunities, and innovators will bring in new products that you add into the marketplace. So diversification must be taken in stride as trade deepens economic interaction.
Confidente. Lifting the Lid. Copyright © 2015