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6 logistics corridors that are paving the way for intra-Africa trade

The rise of multimodal corridors in Africa is a massive boost for trade within the continent, allowing countries to reap the benefits of the African Continental Free Trade Agreement.
11 February 2020 •

From a two-story specialty coffee house in Nigeria’s capital city Abuja, a barista uses a mobile app to order fresh coffee beans from a plantation nestled over 500 kilometers away on the outskirts of the scenic Mambilla Plateau.

She tracks her order in real time using a GPS function and receives her package within days. Some years back, such a delivery would have taken at least two weeks to complete.

Achieving this in a matter of days is a clear by-product of the country’s burgeoning e-commerce scene, which is expected to hit US$75 billion (€67.15 billion) by 2025.

And Nigeria’s e-commerce awakening is a phenomenon observed across the region.

With a fast-growing youth population, expanding middle-class and the second-largest Internet user population in the world, Africa is fast on its way to becoming a global powerhouse in online retail.

The rise of multimodal corridors in recent years, in particular, has played a significant role in transforming supply chains within the continent, which have long been held back by poor infrastructure and an outdated logistics framework.

They also help to link coastal countries to the hinterlands, allowing African countries to reap the benefits of the landmark African Continental Free Trade Agreement.

Here are six logistics corridors that are putting Africa on the global trade map.

1. Tangier-Agadir Corridor

Sitting in the northern part of Africa, the Tangier-Agadir Corridor comprises the Tanger Med Port and Free Zone, the 350 km Tangier-Casablanca rail, and an 800 km expressway.

New vehicles waiting for loading at the port of Tanger Med, Africa's largest port
New vehicles waiting for loading at the port of Tanger Med, Africa's largest port

With an unparalleled port capacity of almost 4.8 million Twenty-foot Equivalent Units (TEUs) in 2019, the Tanger Med port along the Strait of Gibraltar has allowed Morocco to capitalize on the growing transshipment market in the region — making it the biggest port in Africa.

By 2028, it will become the largest container port in the Mediterranean, thanks to expansion plans to raise the port’s annual capacity to 9 million TEUs.

The Tanger Free Zone (TFZ)’s four export-oriented free trade zones have also attracted hundreds of foreign companies from the automotive, aeronautics and textile sectors hoping to target the European market.

This has transformed the local automobile sector, which in 2017 became Morocco’s top export sector.

The vast potential of the corridor has caught the attention of third-party logistics players like DHL Global Forwarding, which set up a logistics hub in Tanger Med port last year.

The 6,000 square-meter facility is the company’s largest facility in Morocco, serving as a gateway to international markets like Europe, North and West Africa. On top of air, sea and road freight services, the facility also specializes in customs clearance facilitation and supply chain management.

Another key feature of the TFZ is the Tangier-Casablanca rail which connects five free-trade zones to the port, bringing together over 800 businesses while creating revenues of almost US$7.1 billion.

2. Djibouti-Addis Ababa Corridor

The Djibouti-Addis Ababa Corridor on the eastern tip of Africa is home to the continent’s most technologically advanced container terminal.

It also includes the 4,800-hectare Djibouti International Free Trade Zone (DIFTZ), the largest free trade zone in Africa, which will be opening in phases leading up to 2028.

Addis Ababa, Ethiopia
Addis Ababa, Ethiopia

Strategically located at the mouth of the Bab el Mandeb Strait, the biggest shipping lane between Asia and Europe, the Doraleh Port is the jewel crown of Ethiopia’s sea trade. About 95 percent of its imports come through the zone.

Djibouti’s location at the entrance of the Red Sea means it is exceptionally well-placed along major trading routes. About 10 percent of oil exports and 20 percent of commercial goods pass through the narrow strait right off Djibouti’s coast on their way to and from the Suez Canal.

Another important feature of the corridor is the Djibouti-Ethiopia railway which connects businesses to industrial hubs across Ethiopia. The 728 km line has cut journey times between the destinations from four days to 12 hours.

3. Abidjan-Lagos Corridor

Spanning the southern Atlantic shores of the Ivory Coast, the Abidjan-Lagos Corridor stretches across more than 1,000 km of roads.

Work on the Abidjan-Lagos Corridor Highway is underway — a six-lane motorway that will connect five of Africa’s largest and most economically vibrant cities: Abidjan, Accra, Cotonou, Lomé, and Lagos.

Jointly funded by The ECOWAS Commission, the African Development Bank and the European Union, the highway will allow landlocked countries like Burkina Faso, Mali and Niger to gain access to thriving seaports in West Africa.

The project is expected to spur economic development in the area with the development of economic zones like logistics centers and industrial zones, along with cross-border and regional markets.

It is estimated that the development will bring together more than 30 million urban dwellers and drive almost 75 percent of the region’s economic activity.

4. Mombasa-Kigali Corridor

Over on the south-eastern coast of Africa, the Mombasa-Kigali Corridor comprises the Mombasa Port, the Mombasa-Nairobi railway network, and over 1,700 km of roads that link both cities.

As Africa’s fifth-busiest port, the 1.1 million TEU Mombasa Port is the main trade gateway for the Eastern Africa region connecting Kenya with seven neighbors that include Uganda, Somalia, Rwanda and South Sudan.

The Nairobi to Mombasa train on the historic Uganda railway line
The Nairobi to Mombasa train on the historic Uganda railway line

Its strategic location has helped to boost local businesses, and annual cargo traffic is expected to rise further from 32 million tons in 2018 to 47 million tons by 2025.

Another key element of the corridor is the US$3.8 billion Mombasa-Nairobi railway that connects Kenya to Uganda.

Running 470 km across nine port terminal stations, the rail allows containers to be loaded directly onto trains for transportation to Nairobi. It operates 14 freight trains per day carrying almost 750 TEUs of containers, while reducing travel time for freight from 12 days to only eight hours.

5. Durban-Lubumbashi Corridor

The region’s busiest corridor in terms of both values and freight, the Durban-Lubumbashi Corridor — also known as the North-South Corridor — is a combination of two traditional corridors connecting the port of Durban in Southern Africa to the Eastern Port of Dar es Salaam.

Durban Port stands out as one of the world’s leading container ports linked by rail and road to over seven African countries.

As the best-performing Sub-Saharan Africa port, Durban Port serves as the main gateway to the Gauteng province, one of South Africa’s leading economic hubs situated some 600 km from the port.

Durban Port
Durban Port

It is also the country’s main port for the automotive sector, overseeing 66 percent of vehicle manufacturers’ imports and exports.

In 2018, the port handled almost 2.7 million TEUs of containers, 10.7 million tons of dry bulk, 28 million tons of liquid bulk cargo, 455,000 units of automotive parts and 2.2 million tons of breakbulk cargo.

6. Moatize-Nacala Corridor

The Moatize-Nacala corridor is one of Mozambique’s main economic drivers, comprising a world-class deep sea port and a state-of-the-art railway network.

Started in 2012 by Brazilian mining conglomerate Vale and Mozambique’s state port and railway operator CFM, with support from Mitsui of Japan, the 912 km project connects northern Mozambique, southern Malawi and the Moatize coalfield.

The goal is to enable some 18 metric tons per annum of coal to be exported to key markets like Asia, Europe, India and the Americas.

When in full operation, the rail segment of the Nacala Logistics Corridor is expected to raise coal exports by a whopping 40 percent.

Apart from being the deepest port in Southern Africa, the Port of Nacala in northern Mozambique is also a key terminal for coal for the Moatize mine in the province of Tete.

As promising as the future of Africa’s logistics framework looks, the glue that will hold it all together is ultimately the cooperation of governments, leaders and third-party logistics partners, explained Amadou Diallo, CEO, DHL Global Forwarding Middle East and Africa.

“Just as Asia and Europe have done, Africa urgently needs to simplify operations and eliminate borders to accelerate intra-African trade and unleash an economic boom,” he said.

“This has to start and end with a complete policy engagement at the regional and sub-regional level. Working together as one will open up avenues for long-term growth, ultimately putting Africa on the world map for free and open trade.”

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From a two-story specialty coffee house in Nigeria’s capital city Abuja, a barista uses a mobile app to order fresh coffee beans from a plantation nestled over 500 kilometers away on the outskirts of the scenic Mambilla Plateau.

She tracks her order in real time using a GPS function and receives her package within days. Some years back, such a delivery would have taken at least two weeks to complete.

Achieving this in a matter of days is a clear by-product of the country’s burgeoning e-commerce scene, which is expected to hit US$75 billion (€67.15 billion) by 2025.

And Nigeria’s e-commerce awakening is a phenomenon observed across the region.

With a fast-growing youth population, expanding middle-class and the second-largest Internet user population in the world, Africa is fast on its way to becoming a global powerhouse in online retail.

The rise of multimodal corridors in recent years, in particular, has played a significant role in transforming supply chains within the continent, which have long been held back by poor infrastructure and an outdated logistics framework.

They also help to link coastal countries to the hinterlands, allowing African countries to reap the benefits of the landmark African Continental Free Trade Agreement.

Here are six logistics corridors that are putting Africa on the global trade map.

1. Tangier-Agadir Corridor

Sitting in the northern part of Africa, the Tangier-Agadir Corridor comprises the Tanger Med Port and Free Zone, the 350 km Tangier-Casablanca rail, and an 800 km expressway.

New vehicles waiting for loading at the port of Tanger Med, Africa's largest port
New vehicles waiting for loading at the port of Tanger Med, Africa’s largest port

With an unparalleled port capacity of almost 4.8 million Twenty-foot Equivalent Units (TEUs) in 2019, the Tanger Med port along the Strait of Gibraltar has allowed Morocco to capitalize on the growing transshipment market in the region — making it the biggest port in Africa.

By 2028, it will become the largest container port in the Mediterranean, thanks to expansion plans to raise the port’s annual capacity to 9 million TEUs.

The Tanger Free Zone (TFZ)’s four export-oriented free trade zones have also attracted hundreds of foreign companies from the automotive, aeronautics and textile sectors hoping to target the European market.

This has transformed the local automobile sector, which in 2017 became Morocco’s top export sector.

The vast potential of the corridor has caught the attention of third-party logistics players like DHL Global Forwarding, which set up a logistics hub in Tanger Med port last year.

The 6,000 square-meter facility is the company’s largest facility in Morocco, serving as a gateway to international markets like Europe, North and West Africa. On top of air, sea and road freight services, the facility also specializes in customs clearance facilitation and supply chain management.

Another key feature of the TFZ is the Tangier-Casablanca rail which connects five free-trade zones to the port, bringing together over 800 businesses while creating revenues of almost US$7.1 billion.

2. Djibouti-Addis Ababa Corridor

The Djibouti-Addis Ababa Corridor on the eastern tip of Africa is home to the continent’s most technologically advanced container terminal.

It also includes the 4,800-hectare Djibouti International Free Trade Zone (DIFTZ), the largest free trade zone in Africa, which will be opening in phases leading up to 2028.

Addis Ababa, Ethiopia
Addis Ababa, Ethiopia

Strategically located at the mouth of the Bab el Mandeb Strait, the biggest shipping lane between Asia and Europe, the Doraleh Port is the jewel crown of Ethiopia’s sea trade. About 95 percent of its imports come through the zone.

Djibouti’s location at the entrance of the Red Sea means it is exceptionally well-placed along major trading routes. About 10 percent of oil exports and 20 percent of commercial goods pass through the narrow strait right off Djibouti’s coast on their way to and from the Suez Canal.

Another important feature of the corridor is the Djibouti-Ethiopia railway which connects businesses to industrial hubs across Ethiopia. The 728 km line has cut journey times between the destinations from four days to 12 hours.

3. Abidjan-Lagos Corridor

Spanning the southern Atlantic shores of the Ivory Coast, the Abidjan-Lagos Corridor stretches across more than 1,000 km of roads.

Work on the Abidjan-Lagos Corridor Highway is underway — a six-lane motorway that will connect five of Africa’s largest and most economically vibrant cities: Abidjan, Accra, Cotonou, Lomé, and Lagos.

Jointly funded by The ECOWAS Commission, the African Development Bank and the European Union, the highway will allow landlocked countries like Burkina Faso, Mali and Niger to gain access to thriving seaports in West Africa.

The project is expected to spur economic development in the area with the development of economic zones like logistics centers and industrial zones, along with cross-border and regional markets.

It is estimated that the development will bring together more than 30 million urban dwellers and drive almost 75 percent of the region’s economic activity.

4. Mombasa-Kigali Corridor

Over on the south-eastern coast of Africa, the Mombasa-Kigali Corridor comprises the Mombasa Port, the Mombasa-Nairobi railway network, and over 1,700 km of roads that link both cities.

As Africa’s fifth-busiest port, the 1.1 million TEU Mombasa Port is the main trade gateway for the Eastern Africa region connecting Kenya with seven neighbors that include Uganda, Somalia, Rwanda and South Sudan.

The Nairobi to Mombasa train on the historic Uganda railway line
The Nairobi to Mombasa train on the historic Uganda railway line

Its strategic location has helped to boost local businesses, and annual cargo traffic is expected to rise further from 32 million tons in 2018 to 47 million tons by 2025.

Another key element of the corridor is the US$3.8 billion Mombasa-Nairobi railway that connects Kenya to Uganda.

Running 470 km across nine port terminal stations, the rail allows containers to be loaded directly onto trains for transportation to Nairobi. It operates 14 freight trains per day carrying almost 750 TEUs of containers, while reducing travel time for freight from 12 days to only eight hours.

5. Durban-Lubumbashi Corridor

The region’s busiest corridor in terms of both values and freight, the Durban-Lubumbashi Corridor — also known as the North-South Corridor — is a combination of two traditional corridors connecting the port of Durban in Southern Africa to the Eastern Port of Dar es Salaam.

Durban Port stands out as one of the world’s leading container ports linked by rail and road to over seven African countries.

As the best-performing Sub-Saharan Africa port, Durban Port serves as the main gateway to the Gauteng province, one of South Africa’s leading economic hubs situated some 600 km from the port.

Durban Port
Durban Port

It is also the country’s main port for the automotive sector, overseeing 66 percent of vehicle manufacturers’ imports and exports.

In 2018, the port handled almost 2.7 million TEUs of containers, 10.7 million tons of dry bulk, 28 million tons of liquid bulk cargo, 455,000 units of automotive parts and 2.2 million tons of breakbulk cargo.

6. Moatize-Nacala Corridor

The Moatize-Nacala corridor is one of Mozambique’s main economic drivers, comprising a world-class deep sea port and a state-of-the-art railway network.

Started in 2012 by Brazilian mining conglomerate Vale and Mozambique’s state port and railway operator CFM, with support from Mitsui of Japan, the 912 km project connects northern Mozambique, southern Malawi and the Moatize coalfield.

The goal is to enable some 18 metric tons per annum of coal to be exported to key markets like Asia, Europe, India and the Americas.

When in full operation, the rail segment of the Nacala Logistics Corridor is expected to raise coal exports by a whopping 40 percent.

Apart from being the deepest port in Southern Africa, the Port of Nacala in northern Mozambique is also a key terminal for coal for the Moatize mine in the province of Tete.

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With cooperation from its member countries, the landmark agreement could be a turning point for Africa’s underperforming intra-regional trade.

The ongoing global uncertainty and the lack of regional cooperation have long hindered Africa’s potential from becoming an economic powerhouse.

But with its latest economic game changer coming in the form of a new free trade agreement, the continent looks to be well on track.

After four years of negotiations, the African Continental Free Trade Agreement (AfCFTA) finally came into effect on May 30 this year.

With 54 countries in the bloc — forming a free trade area covering more than a billion people, and with a market size of around US$2.5 trillion (€2.26 trillion) — the AfCFTA is a landmark development.

The agreement aims to create a single market for its member states’ goods and services, facilitate free movement of people and investments, and eventually launch a single-currency union.

Implementing the AfCFTA may be challenging because of the economic disparity among African countries.
Implementing the AfCFTA may be challenging because of the economic disparity among African countries.

These initiatives are fraught with significant challenges, particularly in the light of ongoing trade conflicts between the U.S. and China, but the rewards for the continent will also be substantial.

How Africa stands to gain from AfCFTA

One key benefit of the AfCFTA is the reduction of tariffs on 90 percent of goods traded across the continent. The UN Economic Commission for Africa (UNECA) estimated that such a move could increase intra-African trade by 52 percent in less than five years.

The continent has some catching up to do in this respect: intra-African exports made up only 17 percent of total trade in 2017, compared to 59 percent and 69 percent for intra-Asia and intra-Europe trade respectively.

For African-owned companies, the agreement will make new markets more accessible within the region. Tapping on the AfCFTA can help companies grow their customer base and diversify, both by export destination and the type of goods produced.

“The agreement opens the door to the creation of more efficient regional supply chains which, in turn, would promote investment, growth, and job creation in Africa,” commented Amadou Diallo, CEO, DHL Global Forwarding, Middle East and Africa.

Reduced input costs will be another significant advantage. The AfCFTA will make it easier for companies to import raw materials from other resource-rich countries within Africa. It will also ease the process of setting up assembly firms in other countries to access cheaper means of production, and thus improve their bottom lines.

In the long term, the AfCFTA is also expected to boost economic growth across the continent. On average, manufacturing represents only about 10 percent of total GDP in Africa currently — well below the figure in other developing regions.

A thriving continental free trade area could give countries an incentive to transform their commodities into manufactured goods, and thus reduce this gap. A more significant manufacturing sector would also lead companies to create more well-paid jobs and help alleviate poverty in Africa.

A cushion against the U.S.–China trade conflict

More broadly, forming a cohesive and uniform pan-African approach to trade could cushion the continent against any negative transitional effects of the trade war between China and the U.S.

In 2018, the value of trade between Africa and China, the continent’s largest trading partner, was worth over US$200 billion. As a way to spread the risks presented by its trade war with the U.S., China expanded its imports from the continent by 65 percent to US$100 billion, up from US$60 billion in 2017.

DHL Global Trade Barometer China September

However, the trade war has led to slowing growth in China, which raises the possibility of reduced export opportunities for African companies in the future due to softer demand.

As DHL’s Global Trade Barometer (GTB) indicates, the outlook for China’s trade growth contracted from 49 points in June 2019 to 45 in September. Key sectors also reveal deteriorating trends. Trade in industrial raw materials, for example, fell by 22 points to just 48 over the three months to September, indicating a weakening sector outlook.

The timely ratification of the AfCFTA, which will jump-start intra-African trade, will cushion African exporters against a potential reduction in Chinese demand.

It will also put companies in a stronger position to seize opportunities to fill any exports gap from China to the U.S. Potential beneficiaries include African natural gas producers, particularly Angola’s crude oil producers.

On the other hand, as some commentators have pointed out, harmful trade war fallout for Africa could include China dumping cheap products into domestic African markets, as it looks to consolidate what it has lost in the U.S.

Roadblocks to overcome

While the AfCFTA offers an ambitious vision of intra-African free trade, implementing it may prove challenging, not least because of the economic disparity that exists among African countries.

“It will be important to address [Africa’s economic] disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented,” said Landry Signe, a fellow at the Brookings Institution’s Africa Growth Initiative.

Hampered by substandard power networks, airline connections, and roads, many less developed economies are ill-equipped to enable trade flows, even if governments tear down tariffs and legal barriers.

Governments will need to boost the skill levels of its workforce.
Governments will need to boost the skill levels of its workforce.

Instead, it is the more developed economies, such as South Africa, that are likely to profit most from the agreement. South Africa has a relatively robust infrastructure, for example, and so will able to leverage its air links, ports, and dry docks to attract more investment.

Africa’s advanced countries are also at an advantage with their more strongly developed manufacturing capabilities. There is a risk that by allowing them to sell their goods and services to the continent’s less developed countries, the AfCFTA could undercut industrial development in these places.

Unlocking Africa’s economic and trade potential

The AfCFTA can likely still play a game-changing role in Africa’s economic diversification and growth.

For it to work, however, participating countries will need to build an efficient and participatory institutional architecture for it to avoid leaving any poorer economies behind.

At the same time, governments will need to ensure their corporate law systems allow businesses to operate across borders with minimal red tape. Industrial policies will be required — especially those concerning manufacturing — to act as guidelines for productivity, competition, diversification, and economic complexity.

And governments will also need to boost skill levels — an issue that will come to the fore as companies try to build international value chains with a highly trained workforce.

The stakes are high, but already, African countries are starting to strategize on how to benefit from the agreement.

As Monde Muyangwa, Director, Africa program at the Woodrow Wilson International Center, suggests: “If Africa really gets this right, and puts its energies and its forces behind it, this could transform the continent.”

[post_title] => Africa’s continental free trade agreement has finally launched. What now? [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => africas-continental-free-trade-agreement-has-finally-launched-what-now [to_ping] => [pinged] => [post_modified] => 2022-09-28 00:17:23 [post_modified_gmt] => 2022-09-27 16:17:23 [post_content_filtered] =>

The ongoing global uncertainty and the lack of regional cooperation have long hindered Africa’s potential from becoming an economic powerhouse.

But with its latest economic game changer coming in the form of a new free trade agreement, the continent looks to be well on track.

After four years of negotiations, the African Continental Free Trade Agreement (AfCFTA) finally came into effect on May 30 this year.

With 54 countries in the bloc — forming a free trade area covering more than a billion people, and with a market size of around US$2.5 trillion (€2.26 trillion) — the AfCFTA is a landmark development.

The agreement aims to create a single market for its member states’ goods and services, facilitate free movement of people and investments, and eventually launch a single-currency union.

Implementing the AfCFTA may be challenging because of the economic disparity among African countries.
Implementing the AfCFTA may be challenging because of the economic disparity among African countries.

These initiatives are fraught with significant challenges, particularly in the light of ongoing trade conflicts between the U.S. and China, but the rewards for the continent will also be substantial.

How Africa stands to gain from AfCFTA

One key benefit of the AfCFTA is the reduction of tariffs on 90 percent of goods traded across the continent. The UN Economic Commission for Africa (UNECA) estimated that such a move could increase intra-African trade by 52 percent in less than five years.

The continent has some catching up to do in this respect: intra-African exports made up only 17 percent of total trade in 2017, compared to 59 percent and 69 percent for intra-Asia and intra-Europe trade respectively.

For African-owned companies, the agreement will make new markets more accessible within the region. Tapping on the AfCFTA can help companies grow their customer base and diversify, both by export destination and the type of goods produced.

“The agreement opens the door to the creation of more efficient regional supply chains which, in turn, would promote investment, growth, and job creation in Africa,” commented Amadou Diallo, CEO, DHL Global Forwarding, Middle East and Africa.

Reduced input costs will be another significant advantage. The AfCFTA will make it easier for companies to import raw materials from other resource-rich countries within Africa. It will also ease the process of setting up assembly firms in other countries to access cheaper means of production, and thus improve their bottom lines.

In the long term, the AfCFTA is also expected to boost economic growth across the continent. On average, manufacturing represents only about 10 percent of total GDP in Africa currently — well below the figure in other developing regions.

A thriving continental free trade area could give countries an incentive to transform their commodities into manufactured goods, and thus reduce this gap. A more significant manufacturing sector would also lead companies to create more well-paid jobs and help alleviate poverty in Africa.

A cushion against the U.S.–China trade conflict

More broadly, forming a cohesive and uniform pan-African approach to trade could cushion the continent against any negative transitional effects of the trade war between China and the U.S.

In 2018, the value of trade between Africa and China, the continent’s largest trading partner, was worth over US$200 billion. As a way to spread the risks presented by its trade war with the U.S., China expanded its imports from the continent by 65 percent to US$100 billion, up from US$60 billion in 2017.

DHL Global Trade Barometer China September

However, the trade war has led to slowing growth in China, which raises the possibility of reduced export opportunities for African companies in the future due to softer demand.

As DHL’s Global Trade Barometer (GTB) indicates, the outlook for China’s trade growth contracted from 49 points in June 2019 to 45 in September. Key sectors also reveal deteriorating trends. Trade in industrial raw materials, for example, fell by 22 points to just 48 over the three months to September, indicating a weakening sector outlook.

The timely ratification of the AfCFTA, which will jump-start intra-African trade, will cushion African exporters against a potential reduction in Chinese demand.

It will also put companies in a stronger position to seize opportunities to fill any exports gap from China to the U.S. Potential beneficiaries include African natural gas producers, particularly Angola’s crude oil producers.

On the other hand, as some commentators have pointed out, harmful trade war fallout for Africa could include China dumping cheap products into domestic African markets, as it looks to consolidate what it has lost in the U.S.

Roadblocks to overcome

While the AfCFTA offers an ambitious vision of intra-African free trade, implementing it may prove challenging, not least because of the economic disparity that exists among African countries.

“It will be important to address [Africa’s economic] disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented,” said Landry Signe, a fellow at the Brookings Institution’s Africa Growth Initiative.

Hampered by substandard power networks, airline connections, and roads, many less developed economies are ill-equipped to enable trade flows, even if governments tear down tariffs and legal barriers.

Governments will need to boost the skill levels of its workforce.
Governments will need to boost the skill levels of its workforce.

Instead, it is the more developed economies, such as South Africa, that are likely to profit most from the agreement. South Africa has a relatively robust infrastructure, for example, and so will able to leverage its air links, ports, and dry docks to attract more investment.

Africa’s advanced countries are also at an advantage with their more strongly developed manufacturing capabilities. There is a risk that by allowing them to sell their goods and services to the continent’s less developed countries, the AfCFTA could undercut industrial development in these places.

Unlocking Africa’s economic and trade potential

The AfCFTA can likely still play a game-changing role in Africa’s economic diversification and growth.

For it to work, however, participating countries will need to build an efficient and participatory institutional architecture for it to avoid leaving any poorer economies behind.

At the same time, governments will need to ensure their corporate law systems allow businesses to operate across borders with minimal red tape. Industrial policies will be required — especially those concerning manufacturing — to act as guidelines for productivity, competition, diversification, and economic complexity.

And governments will also need to boost skill levels — an issue that will come to the fore as companies try to build international value chains with a highly trained workforce.

The stakes are high, but already, African countries are starting to strategize on how to benefit from the agreement.

As Monde Muyangwa, Director, Africa program at the Woodrow Wilson International Center, suggests: “If Africa really gets this right, and puts its energies and its forces behind it, this could transform the continent.”

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As promising as the future of Africa’s logistics framework looks, the glue that will hold it all together is ultimately the cooperation of governments, leaders and third-party logistics partners, explained Amadou Diallo, CEO, DHL Global Forwarding Middle East and Africa.

“Just as Asia and Europe have done, Africa urgently needs to simplify operations and eliminate borders to accelerate intra-African trade and unleash an economic boom,” he said.

“This has to start and end with a complete policy engagement at the regional and sub-regional level. Working together as one will open up avenues for long-term growth, ultimately putting Africa on the world map for free and open trade.”

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