Poor infrastructure and slow tariff harmonisation are major impediments in the implementation of the African Continental Free Trade Area despite the gains made so far, according to trade experts.
This adds up to non-tariff barriers (NTBs) that hinder cross-border trade in Africa such as transport costs, inefficient border processes and excesses by border officials (including extortion and harassment).
These are negatively impacting on businesses, including major companies and SMEs, keen to tap opportunities under the continental trade deal, 26 months since it came into effect.
Kenya is among six countries picked in July 2022 to pilot the AfCFTA alongside Ghana, Cameroon, Egypt, Rwanda and Tanzania.
Infrastructure and logistics gaps were evident when for instance; it took up to 40 days to deliver a tea consignment from Kenya to Ghana, blamed on vessel routing where the ship had to go to Europe first.
There is poor inter-connectivity mainly road and rail across the continent, which has left maritime transport as the current reliable option for far distances, limiting the number of countries (markets) traders’ products can reach.
Most of Africa's railway lines and roads are in bad condition and need huge investments, according to the African Development Bank (AfDB), which notes that the proportion of paved roads on the continent today is five times less than those in developed countries.
“Transport and logistics is among the key challenges. It is easier to export to Europe than to some parts of the continent. This can only be addressed through building a reliable road and rail network,” Trade Economist Adrian Njau said.
Njau is the trade and policy advisor at the East African Business Council (EABC), advising on trade and policy issues in relation to EAC integration.
He spoke in Nairobi yesterday during a national forum targeted at empowering Women in Business to tap into opportunities under the AfCFTA.
The East African Women in Business Platform (EAWiBP) is pushing for women-owned businesses, including SMEs to trade beyond the EAC and COMESA markets, with eyes on the African continent.
According to EAWiBP chairperson Elizabeth Thande, trade liberalisation under the AfCFTA provides a huge opportunity for women to expand beyond the current small cross-border activities, where they form the bulk of traders.
“We count on policy makers to engage the private sector in coming up with the right policies and infrastructure to enable AfCFTA to work,” Thande said.
The logistics concerns come even countries push to clear pending issues on preferential Rules of Origin on sensitive goods, which account for seven per cent of the tariff lines.
The stalemate is on textile and apparel, sugar and sugar products, goods produced in Special Economic Zones (SEZs), edible oils and motor vehicles.
The East African Community (EAC), which is negotiating as a bloc, has however offered up to 90 per cent of tariff lines, opening the region for trade with countries across the continent.
Of the 54 countries that have signed the AfCFTA agreement with 49 having ratified it, only about 40 have exchanged their tariff offerings allowing trade to take place.
Less than 10 have ratified the Protocol on the movement of people.
Kenya’s prioritised sectors include merchandise trade in agriculture, livestock and fisheries, manufacturing, handicrafts, mining, oil and gas.
Priority export sectors under include professional services, tourism, education, health, financial services, ICT, cultural and sports services; and transport and logistics.
East African Community partner States have adopted the EAC Tariff Offer for Category A products amounting to 90.2 per cent (5,129 tariff lines out of the total 5,688 lines), to be liberalised in 10 years after the start of trading under AfCFTA.
It is now among state parties that have met the minimum requirements for Category, allowing trading on a provisional basis under AfCFTA.
Kenya is confident that the implementation of the AfCFTA trade pact has the potential to unlock market access for its goods and services within the African continent, while creating numerous job opportunities across multiple sectors.
As it stands, statistics show that the AfCFTA creates a large single market with a population of over 1.2 billion people and a combined GDP of about $ 2.5 trillion (407.5 trillion).
Despite the significance of trade, Africa’s share of the total global trade remains low at 2.8 per cent. In addition, the share of intra-African trade has been limited at 18 per cent.