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Inland Africa’s free trade zone begins on January 1, with 54 countries being the largest in the world. 90% of all tariffs should be eliminated. But the internal market still has many obstacles to overcome.
By Caroline Hoffmann, ARD Studio Nairobi
The fresh greenish-yellow mangoes are stacked in one corner of the aisle, in the next they rattle on a conveyor belt in a giant juicer. Here 200 tons of fruit are processed every day to make juices or soft drinks. All children in Kenya know the marks, and also in neighboring countries.
Entrepreneur Kimano Rugendo is proud of his success. “We export to Zambia, Rwanda, Burundi, Tanzania, Uganda and the Congo,” he says. “But we have some challenges to overcome, there are tariffs, sometimes trade barriers. That makes exporting difficult.”
So far difficult trade in Africa
Simply crossing the border with goods has often been difficult among many African countries. Intra-African transport: time consuming, expensive and there is a patchwork of trade rules and tariffs on the continent. This leads to long waiting times at the borders, endless paperwork for imports, and repeated requests for bribes.
Official restrictions between African countries are fundamentally higher than those between Africa and the rest of the world. According to the 2017 World Trade Organization statistics, intra-African trade only accounts for about 17 percent. For comparison: within Europe it was 69 percent in the same year.
Development towards the largest domestic market
But now everything should improve. The African Free Trade Area (AfCFTA) begins on January 1. 54 countries with 1.2 billion inhabitants will form a single market at the end of the process. Then it would be the largest free trade zone in the world.
The Kenyan juice producer can’t wait to wait. “We are looking forward to it,” says businessman Rugendo. “We would have wanted that much earlier. Then we will have uniform conditions. That opens up a lot of new markets for us.” The goal: eliminate customs duties on 90% of all goods and services.
But there is still a long way to go: the project is just beginning, member states still have to negotiate on customs duties, uniform border controls and rules or rules of origin. The process will not be easy.
Aly Khan Satchu, an economic analyst from Kenya, knows this too. He told Al Jazeera broadcaster: “The problem is that there are many reactionary forces that benefit from the asymmetric information and the current economic space of the continent. This agreement will change the entire African economy. But there are many people who are very powerful and they don’t want to, because they benefited from the old system for many years. ” A single market like the one that exists in the EU is still a long way off.
The free trade zone creates a huge market
But the possibilities are enormous. “This free trade zone creates a huge market and offers the opportunity for new jobs,” says Lyndia Chinenye Iroulo, a political scientist at the GIGA Institute in Hamburg. “This will allow Africa to catch up economically and reduce its dependence on the rest of the world.” Until now, Africa has relied on imports from Europe, China and the United States in many areas. The industrial processing of many products, such as cocoa, cotton or tomatoes, is hardly done on the continent itself and therefore does not create any additional value, but rather abroad.
In the corona pandemic, urgently needed protective equipment was in short supply; it had to be imported, but it was hardly available. The obstacles were high in helping each other on the continent. “This event definitely opened our eyes to the importance of growing together,” says Iroulo. “Covid is another push to boost the free trade area.”
The protection of microentrepreneurs is an important issue
The World Bank estimates that Africa’s economic output could increase by 335 billion euros in 15 years. Free trade could lift 30 million Africans out of poverty. The question of how the many African small traders and micro-entrepreneurs, in particular, can be strengthened and protected will play a decisive role in this. But there is still a long way to go.
Much work remains to be done to make the deal a success. The continent lacks a good and complete infrastructure. Some countries are already investing in this. Kenya is building a huge container port in Lamu, in the northeast of the country. So far they have lived off fishing and tourism here, but that is about to change. The project is not indisputable, but the island will become an international logistics center.
New central port component
In the port of Lamu, dhows continue to navigate, wooden fishing boats, an arm of the sea is already digging large dredgers in the canal, excavators are working on the newly paved surface. Thousands of containers will soon be handled here, with the port, a new rail line and new roads creating a transportation hub for East Africa. “This project is very important to integrate the African continent into global world trade,” says project director Silvester Kasuku, praising the port. “It is also a central building block for the African free trade area.”
To inspect the construction progress, the heads of governments of Kenya, Uhuru Kenyatta, and Ethiopia, Abiy Ahmed, took the opportunity to fly in person in mid-December. They promised to increase trade, also between the two countries. The African construction workers and the Chinese engineers of the project came together especially for this purpose. Because here the Middle Kingdom is building another great project for Africa. China has known for a long time how important the African market is and how much more important it will be in the future.
