Business

AfCFTA gives Africa hope

TRUCKS with copper at the Zambia-Botswana Kazungula Border Post. PICTURE: EDDIE MWANALEZA

KALONDE NYATI, Lusaka
ALTHOUGH Africa has been painted as a continent that has not fully exploited its natural resources, it has a number of successful industries that are making considerable contribution to the local and export market demand.
The contributions are spread across sectors, and they create revenue and jobs in a quest to meet the Vision 2030.
Some home-grown entities that are Africa’s shining examples are Dangote, United Bank for Africa, Econet, MTN, Copperbelt Energy Corporation, Shoprite and Zambeef Products Plc, which is an integrated agri-business that aspires to solidify its position on both the local and export markets.
Zambeef, which produces cereal crops, beef, chickens, pigs, milk and stock feed, among other products, and distributes across the country, region and also has operations in West Africa, is an example of how African companies can contribute to continental trade.
But like most entities operating across the continent, Zambeef has not fully accessed the export market, thus resulting in the low intra-African trade levels currently at 15 percent.
With the coming of African Continental Free Trade Area (AfCFTA), which is aimed at creating an effective single market through the facilitation of the free movement of goods and services, Zambeef is elated.
“The planned launch of the AfCFTA will move the continent forward,” Zambeef head of corporate affairs Felix Lupindula says.
This excitement is because numerous challenges that hinder the penetration of markets in Africa will be a thing of the past. For instance, challenges such as lack of access to trade and market information as evidenced by Mauritius and Nigeria that import leather products from Italy and Belgium, yet they could be accessed from South Africa, Botswana or even Zambia, will be a thing of the past.
Other barriers include lack of transport infrastructure, delays caused by agencies operating at the borders and tedious visa-processing requirements.
However, Mr Lupindula is optimistic that the AfCFTA will help in increasing the productivity of the continent and Zambeef is keen on growing from feeding the nation to the continent.
This is in line with the United Nations projecting a three-fold increase in demand for food from US$8 billion in 2017 to US$25 billion in 2032, owing to the region’s growing population.
The agri-business giant is expanding its retail value chain, which enables small, medium and other commercial farmers to participate in the value chain.
“Africa is its own biggest market – be it for its agricultural produce, raw material, processed or finished goods,” he says.
However, moving forward, impediments such as lack of access to markets and technical know-how, transport for goods, post-harvest storage and agro-processing facilities for value addition need to be addressed
Mr Lupindula also feels that there is need for inclusive industry reforms.
“A mode to discourage non-tariff barriers should be worked out and must be respected by all AfCFTA members. This has been a big hindrance in the success of regional trade groupings,” he says.
The Zambia Association of Chambers of Commerce and Industry (ZACCI) is also a firm supporter of intra-African trade and its members are ready to grab the opportunities, but feels that effective implementation of the national industrial policy, and local content and export strategies is necessary for the country to benefit.
ZACCI chief executive officer Prisica Chikwashi says policies and strategies aimed at building capacity to transform the economy into an industrial base are cardinal.
Additionally, improving governance around trade, regulatory operations and infrastructure at national and continental level should take centre stage, Trade Law Center (Tralac) executive director Trudi Hartzenberg notes.
“Improving efficiency of transport, financial services, border management processes and reducing time spent in transit and at ports of entry and exit will enhance competitiveness,” Ms Hartzenberg says.
Locally, Government is aware of the importance of the AfCFTA and challenges that could hinder effective implementation. Clearly, measures that will ensure the smooth flow of goods and services produced by local companies are being put in place.
For instance, the Zambian and Angolan governments have agreed to expedite the development of transport infrastructure to boost trade between the two countries.
The two governments want to develop roads, railway, maritime and aviation infrastructure to enhance connectivity, which has for a long time been hampered by inadequate infrastructure.
Zambia and Angola have also signed a memorandum of understanding on bilateral cooperation on trade in oil and gas and help reduce the US$1 billion annual petroleum import bill, which is as a result of imports from the Middle East.
Agencies such as the Competition and Consumer Protection Commission (CCPC) are also working towards ensuring that all loopholes that may result in unfair trading practices ahead of AfCFTA are sealed.
At continental level, the African Union, which is the mastermind of the project, has among various programmes launched Agenda 2063 with boosting intra- African trade at the epicentre, targeting to grow it to 24 percent by 2022.
In the area of trade finance support, institutions such as the African Export and Import Bank (Afreximbank) have committed US$25 billion to support intra-African trade from 2017 to 2025.
Of the total commitment, US$8 billion has been disbursed while efforts in addressing the continent’s perceived risk profile are being made. The bank has been instrumental since inception 25 years ago through provision of financing to a tune of US$50 billion and over US$65 billion in syndications and guarantee activities.
“We have a number of programmes and initiatives that bring together African financial institutions, corporate entities and regulators on customer due diligence and corporate governance matters to improve Africa’s risk profile,” bank executive vice president for business development and corporate banking Amr Kamel said.
Other programmes under the bank focus on expansion of access to correspondent banking facilities for African commercial banks and the recently launched MANSA repository platform, a centralised database for conducting customer due diligence in Africa.
It is evident that all stakeholders want the AfCFTA to work but it is important for entities operating on the continent to take the lead by stimulating the exchange of ideas and competition which will result in innovation and creation of new industries.
Also of significance is for individual countries to ratify and make AfCFTA a reality as it will only be in full force a month after a minimum of 22 countries have ratified.



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