How to Increase Intra-African Trade, Beyond CFTA
According to the Brookings Institution, the volume of intra-African export (export between African countries) was about 18% in 2016 compared to compared to 59% and 69% percent for intra-Asia and intra-Europe exports, respectively. Surprisingly, African countries do more business with countries outside the continent than within the continent. With a population of over 1.2 billion people, vast agricultural and mineral resources, it’s very surprising that Africa is yet to look inwards to fully harness these resources in order to reduce poverty, hunger and unemployment.
In an effort to increase the volume of trade between countries of the continent, 44 nations recently signed the Continental Free Trade Agreement (CFTA), one can only hope that it will greatly improve the trade in made-in-Africa products within African countries and not make it easier for foreign goods to flood the continent.
Despite the signing of this agreement, there are a number of challenges that can prevent the increase in intra-African trade. One of such, is road connectivity and ease of transportation between countries. Africa is poorly linked by land, sea and air, which makes it difficult and expensive for goods and services to be moved freely between countries. The Trans-African Highway, a project that started in 1970 is designed to address this problem. However, due to a myriad of challenges including conflicts, corruption, apathy from member countries, this project has barely gone halfway. In some areas where the roads have been completed, proper maintenance has been a challenge. If yams can be taken from Nigeria to Kenya by road in about 2 days, or from cotton from Cairo to Lusaka in less than a week, the volume of trade will definitely increase between these countries. Apart from boosting the economies of the countries that are trading directly, countries that these roads pass through will also benefit immensely. For example, the drivers of these trucks will need to rest at different points during the journey so businesses like motels, restaurants, laundry and even auto repair shops will spring up naturally in countries through which these roads pass. This will automatically create employment and reduce poverty. This project should be given urgent attention while plans for linking Africa by rail should also be looked into. The development of water transport is another area that governments of the continents should look into.
Having said this, the governments of African countries must realize that for intra-African trade to flourish, they must put in place internal infrastructures and processes that will encourage local producers to meet up with both quality and quantity at competitive prices. Speaking as a Nigerian entrepreneur, we will need steady power supply, proper transport systems, security, transparency from government officials as well as financial incentives such as single digit interest loans that will be easily accessible.
Only when these challenges are resolved can African countries begin to enjoy the benefits of intra-African trade and the Continental Free Trade Agreement.
