ROADS AND TRANSPORT
AfCFTA: The impact of Port Operations
FThe AfCFTA
ree trade is coming under scrutiny especially after the supply chain constraints of Covid 19 and recent disputes such as the Russia/Ukraine conflict. With Africa’s vision to industrialise continuing to gain momentum, the impact of various factors on the ability for intra-Africa trade gains momentum.
In the continuing journey towards intra-Africa trade, the African Union (AU) is determined to work with countries to remove international trade situations such as the complicated and varied tariffs, taxes, customs rules, and logistics and supply chain bottlenecks between member states. Agenda 2063, Africa’s blueprint and 50-year master plan which commenced in 2013, aims to transform Africa into the global powerhouse of the future through the Africa Continental Free Trade Area (AfCFTA).
AfCFTA is a highly ambitious trade agreement policy that encompasses a comprehensive scope that touches on critical areas of Africa’s economy such as digital trade and investment protection, and other areas such as transport infrastructural development. In pursuit of making Africa a global powerhouse, AfCFTA is the strategic framework and flagship project of Agenda 2063 to foster industrialisation. AfCFTA will stimulate employment and investment, thus, enhancing the competitiveness of Africa in the medium to long term.
AfCFTA is set to be the world’s largest free trade area bringing together the 55 countries of the AU comprised of eight (8) Regional Economic Communities (RECs), knows as the AMU, CEN-ZAD, COMESA, EAC, EAC, ECCAS, ECOWAS, IGAD and SADC to create a single market for the continent. AfCFTA’s mandate is to enable the free flow of goods and services across the continent and boost the trading position of Africa in the global market.
Benefits of the AFCFTA
The hope with AfCFTA is that upon its full implementation, about 30 million people will potentially be lifted out of extreme poverty through the sheer magnitude of activating the AfCFTA processes and the spin-offs that occur. In addition, the creation of AfCFTA is expected to result in an income increase of up to USD 450 billion by 2030. As a result, the realization of the AfCFTA will help create jobs, reduce the poverty rate, and boost Africa’s economic status on the world stage.
According to the Cooperative Logistics Network, the implementation of the AfCFTA as of 1st January 2021, allowed the African nations to officially commence trade under a new free trade area across the continent. The AfCFTA has also created the largest free market in the world by connecting 1.3 billion people from 55 nations with a total GDP of $3.4 trillion.
Port operations and the AfCFTA
Defined by SINAY Maritime Data Solutions, port operations are a series of maritime procedures aimed to ensure the smooth transition of vessels and their containers from one terminal to another. The Port of Durban in South Africa is the biggest container port in Africa in terms of capacity. It is South Africa's main port which handles about 1.55 million containers every year. Other major ports in Africa that would play a major role in the AfCFTA through container shipping include the Port of Dar es Salaam in Tanzania, Port Elizabeth in South Africa, Port of Walvis Bay in Namibia, Port of Casablanca in Morocco, and Tolanaro Port in Madagascar.
Over 90% of Africa’s imports and exports in 2016 were conducted via the sea, according to African Ports Evolution. The high frequency of this mode of transport calls for an increasing need for innovation and development in the field of maritime. In addition, the WESGRO Group research in South Africa, reports that 70% of African countries are coastal and there are over a hundred port facilities in the region. African seaborne trade makes up 7.5% of loaded trade and 4.8% of unloaded trade globally. Port operations could thus be the epitome of the AfCFTA because of Africa’s plethora of coastline coverage. Only 30% of African countries do not have coastlines, however, these countries have substitutes to take part in port operations by renting dry ports in coastal countries.
AfCFTA being the largest free market in the world also translates to Regional Economic Communities being far apart, which makes transportation expensive. Effectively managing ports in Africa is a distinct solution among many solutions to fully activate the AfCFTA.
Let us discuss this as the conversation continues at briefing@rdjpublishing.africa
Readings:
https://brickstone.africa/afcfta-in-transportation-and-logisticsindustry/ https://archive.uneca.org/oria/pages/regional-economiccommunities#:~:text=Africa's%20current%20integration%20landsc ape%20contains,%2C%20ECOWAS%2C%20IGAD%20and%20SADC. https://www.wesgro.co.za/uploads/files/3.-African-ports.pdf https://au-afcfta.org/about/ https://www.tralac.org/publications/article/15057-addressingroad-transport-regulatory-issues-an-important-step-towardsrealising-the-objectives-of-theafcfta.html#:~:text=It%20provides%20vital%20links%20that,of%20 trade%20on%20the%20continent