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Trade between African countries

South Africa, the economic heavyweight of the continent, is entering the fray in the realisation of trade in the AfCFTA

After the first exports and imports that enabled a number of countries such as Ghana, Cameroon, Tunisia and Egypt to join the African Continental Free Trade Area, it is now South Africa’s turn to make its first exports under this new economic integration regime.

In relaunching the African Continental Free Trade Area (AfCFTA) project, the African Union has sought to provide a glimmer of hope by offering significant opportunities for businesses across the continent. This is because trade is designed to promote a single market in goods and services, and create a free trade area.

Between South Africa and Ghana, a new trade route is being opened under the Zlecaf regime. A cargo of grinding balls is leaving the port of Durban bound for Ghana. This step is further proof that African countries are on the way to creating a continental trade area where they can exchange not only finished products but also tools useful to their industry. On the other hand, South Africa and Kenya are also actively working together. Kenya is due to export tea and coffee to South Africa.

What are the advantages of free trade?

Free trade integrates the movement of capital and natural persons, facilitates investment and economies of scale, strengthens the competitiveness of national economies, contributes to inclusive and sustainable socio-economic development, to the development of the regional value chain, and to the development of agriculture for food security.

The aim of this scheme is to gradually reduce customs duties in order to stimulate trade between African countries. Today, trade between African countries accounts for only 17% of total trade flows on the continent. Imports from China, which will account for 165 billion dollars by 2022, and from Europe are preferred because they are cheaper than domestic imports into the continent.

With an intra-regional trade rate of less than 18%, significantly lower than intra-Asian trade (50%) and intra-European trade (70%). The reason for this low level of trade between African countries is a lack of information.

By 2035, Africa plans to be the world’s second largest free trade area, with a potential market of 1.3 billion consumers. With a GDP estimated at nearly 3,000 billion dollars, the region expects to be able to accelerate its internal trade and create more jobs and wealth by promoting economies of scale.

Despite being launched in January 2021, trade under Zlecaf is still taking time to become a reality for many countries. This is because countries are taking too long to get themselves in order to start trading goods and benefiting from the advantages offered by Zlecaf.

The customs union could become a reality if the countries unanimously decide to abolish the fiercely abnormal burdensome practices (such as visa duties between Africans, high customs duties, etc.). Other anomalies include the time it takes to clear goods through customs, the number of roadblocks and the lengthy administrative procedures.

Information remains a major problem, and much remains to be done to ensure that entrepreneurs on the continent are properly informed about what Zlecaf is all about. This will enable entrepreneurs to be informed, for example, about the payment system and currency conversion methods, and reduce the cost of transferring money. Zlecaf is committed to making intra-continental trade a reality, and aims to achieve its market liberalisation objectives within 13 years of its creation.

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