Trade plans in Africa all talk and no action
Governments need to be more enthusiastic about implementation
● One of the most prolific messages from the Nelson Mandela centenary lecture presented by Professor Patrick Lumumba was that Tata Madiba would have asked why African countries consume what they don’t produce, and produce what they don’t consume.
He further made a point about coffee, cocoa, tea and other raw commodities that are exported by African countries, which then import expensive, high-value finished products derived from the same inputs they exported.
Although Lumumba’s point is valid and exposes a lack of processing capacity, there are countries such as SA, Mauritius and Kenya that have a fair amount of capacity. The main problem is that trade of some of those inputs does not end up on the continent due to infrastructure challenges and trade impediments.
In a way, it seems that the continent is already attempting to address this challenge by increasing intra-Africa trade.
A case in point is the recently signed African Continental Free Trade Agreement (AfCFTA), which seeks to improve intraAfrica trade beyond the current rate of 20%.
So the plan to address Lumumba’s criticism is under way, but we doubt that it is adequate.
One of the main problems on the African continent is the implementation of grand plans like AfCFTA.
The most recent example is the Tripartite Free Trade Agreement (TFTA) including 26 countries from eastern, southern and a few northern African regions which was launched at the AU Summit held in Egypt in June 2015.
This agreement has similar objectives of freeing trade among its members, but is a lot more complex, bigger and cumbersome than AfCFTA, which has almost twice the number of countries.
Disappointingly, three years later there has been limited movement in terms of implementation of the TFTA.
Products from African countries still face higher tariffs and other forms of trade barriers, which minimise intra-Africa trade.
An example is SA apples, which still face a tariff of about 20% in Egypt (the same place that hosted the launch of the TFTA), but zero in the EU.
This is not limited to SA. Egypt has been participating in the Common Market for East & Southern Africa free trade agreement since 2000, yet it still imposes tariffs of up to 18% on apples from fellow members.
This is against the spirit of intra-Africa trade, and encourages African apple producers to look outside the continent for an export market.
The aforementioned example also applies to other products and countries.
To address this, African governments need to show the political will to effectively implement the trade agreements. Strong leadership needs to be exercised, particularly by the influential and leading economies, such as SA and Nigeria.
In the same week of the Mandela centenary lecture, we saw the heads of state of SA and Nigeria encouraging each other to sign the AfCFTA.
While that gesture is commendable, the two should not end at the signing but rather show even stronger enthusiasm towards implementation.
This will start with both countries reducing tariffs in accordance with the agreements they signed, and further encouraging other countries to do the same.
This can extend to reducing border delays and other bureaucratic requirements.
If these steps are addressed, there could be a positive boost to intra-Africa trade.
In the long term, these countries would also take the lead in addressing infrastructure impediments and building human capacity, thus improving overall services and trade for individuals, as well as the entire continent.
Dr Kalaba is a trade economist with the University of Pretoria and the Bureau for Food and Agricultural Policy. Twitter: @Mmmatlou_Kalaba. Sihlobo is an agricultural economist with the Agricultural Business Chamber of South Africa. Twitter: @WandileSihlobo