The African Continental Free Trade Area (AfCFTA) agreement is on the path to be implemented. But there are still many challenges on that road, such as infrastructure, transport, logistics, border controls and corruption, to name a few.1 David Luke, Editor of the book How Africa Trades is a professor in practice and strategic director at the Firoz Lalji Institute for Africa at the London School of Economics, where he oversees the Africa Free Trade Programme.2 As a former director of the African Free Trade Policy Centre at the Economic Commission for Africa (ECA), he led the technical work on the protocols that make up AfCFTA.3 The first essay in the collection, which Luke co-wrote with Jamie Macleod, underscores the challenges faced by AfCFTA.4 Notwithstanding recent growth on the continent, Africa’s export volumes continue to underperform and fail to live up to their developmental potential.5 What is more the continent’s exports remain stubbornly (and rigidly) concentrated in raw materials such as fuels, ores and metals limiting job growth.6
Africa’s trade in general represents an exchange of the raw material as stated above, for manufacturers and to a lesser extent, foodstuffs.7 The authors that “Africa trade flows must change, and it is trade policy that can be the instrument of this change.”8 This is the starting point for an ambitious series of essays which assesse the state of play in the AfCFTA and regional trade; and developments under the multilateral umbrella of the World Trade Organization (WTO).9
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“There is endless potential for growth in Africa:
- There are freighter operations to main hubs, but there is a need for connectivity to smaller hubs.
2. E-commerce is underdeveloped.
3. Africa’s annual economic growth remains strong.
4. The need for bonded transport continues to grow.”
“There are however some limitations:
- Frustrations: Support functions from an airline’s perspective, like reliable port and rail infrastructure for jet fuel.
2. Challenges: Inconsistent authorities, border control processes, corruption and competitiveness. Some IT systems are incapable of integration.
3. Security: Security standards are poor in some countries.”
What is needed for AfCFA to work and what is the impact of AfCFTA on the supply chain? by Devlyn Naidoo – executive: SARS and Other Government Agencies (OGAs): the SA Association of Freight Forwarders
“What is required for AfCFTA to work and how do we make it work?
- Overcoming supply-side constraints to boost African trade.
2. Closing the infrastructure deficit to boost AfCFTA’s development impact.
3. Eliminating non-tariff barriers to increase cross-border trade.
4. Establish inter-governmental international trade department support.”
“Equally important to the elimination of tariff barriers (Free Trade Area) is the elimination of non-tariff barriers and the creation of an intact continental logistics network to support the growth of intra-Africa trade.”
“Supply chains are dependent on an efficient logistics network. This includes, inter alia, efficient port infrastructure, road and rail networks, a secure and safe trading environment and efficient customs and other government agency compliance processes and procedures.” “Skills development and capacity building for a young supply chain are key.” (Conference highlights air cargo opportunities in Africa)
The key concern with AfCFTA is to develop infrastructure, and have the know how to develop it through education and skills training. This means having to train those who have the talent to develop the knowhow. This also includes having to create a class of IT specialists and engineers who are capable of manufacturing and upgrading the necessary IT infrastructure in terms of computers and satellites that will operate on a cross border grid in terms of communications and mobile devices. This also applies to transportation as has been stated in terms of cargo planes and the fuel needed to supply it which would be expensive if brought in from overseas. It could be extracted in Africa in terms of oil, gas or renewable energy such as hydrogen fuel. Establishing an overarching authority in the form of the African Union Commission (AUC), to oversee the co-ordination of the various Economic Regional Communities (ERCs) to form a single customs Union is another point of contention. To do so, border controls need to be rethought, bureaucracy and red tape need to be limited. There has to be independent oversight of institutions to ensure zero tolerance of corruption at all levels. Institutions like the AUC and the Pan African Parliament (PAP) also need to collaborate through NGOs across borders and the ERCs.
When we speak about limiting red tape we are talking about abolishing certain tariffs. These are taxes paid for certain duties or services rendered on a particular class of imports or exports. The fourth Industrial Revolution (4IR) also has its role to play in upgrading ports, railway infrastructure and roads in terms of robotics, artificial intelligence, coding, and digitalization (IT). As AfCFTA progresses new obstacles and barriers will arise.