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There is no doubt that the African Continental Free Trade Area (AfCFTA) is Africa’s most forward-looking continental agreement that places us as an emerging world trade leader with the power to reform our markets, our economies and the manifest destiny of our people if fully implemented.
The World Bank describes this pact as the world’s largest free trade area in terms of the number of participating countries which is 55 with 1.3 billion people and a combined GDP value of $ 3.4 trillion – it can therefore lift over 30 million people out of extreme poverty and 68 million people living on less than $ 5.50 a day in moderate poverty.
However, such a measure will not be achievable without a comprehensive strategic plan, supported by the right investments, and the development of infrastructure by African countries.
It is important to recognize that a single window transport will be one of the main drivers for Africa’s integration of a single market under AFCFTA – the failure of a seamless transport that will ensure interconnectivity and networking within the continent will hamper progress. of the AFCFTA because it is articulated on the free movement of goods, services and people.
The European Union, realizing this phenomenon as a prerequisite for a single market in its field, has put in place a European transport policy to remove obstacles to the smooth movement of goods between its member states by adopting a single European area of transportation that allows for a fair and competitive mode of transportation.
Unfortunately, the connection with most African countries through modes of transport such as air, rail and road comes with major obstacles, namely the lack of road and rail infrastructure interconnected with Member States, high transport costs and the tonnage of cargoes that can be transported to cover long distances. Unlike Africa, the member states of the European Union have a strong road and maritime transport infrastructure that connects to its member states.
This explains why a third of the goods transported within the EU is done by sea, i.e. 40%, 44% by road and 9% by rail. Road transport is the most viable mode of freight transport within the EU due to its robust motorway system and the seamless cross-border transition provided by its single market.
Therefore, in Africa, we need to prioritize what works for us based on our level of infrastructure development, cross-border transition, convenience and freight cost – maritime transport is also emerging as an option. vital for the movement of large cargoes over long distances. as the cheapest means of transport.
Based on the files of the AFCFTA secretariat, the first goods that were transported under the pact on January 4, 2021 were transported by sea and were from Ghana to Guinea. Indeed, landlocked African countries depend for the most part on neighboring port nations for their trade.
The maritime industry in the African continental domain needs a sharp orientation and a development strategy if we are to realize the full potential of AFCTA. The issue of port expansion is a burning one – without such expansion we cannot manage the capacity to import and export goods as the general population in Africa continues to increase – which means the need for various types of goods is likely to skyrocket.
The development of port infrastructure in Africa is of the utmost importance – there are only three African ports located in Egypt, Morocco and South Africa that feature in the 2020 list of the 100 global container ports with a combined effort processing 51% of goods that are transported by sea.
The rest of the African port nations do not have the capacity to handle very large volumes of bulk and containerized cargo. While the continent’s single market will be practical and viable, it will largely depend on the massive infrastructure development of its maritime industry.
Currently, intra-AU trade is quite low with an estimate of 15% against 61% in Asia and 67% within the European Union. Therefore, there is a growth opportunity with robust maritime trade and infrastructure development, as it is the cheapest and most convenient mode of transport for bulk cargo transportation.
Research indicates that transport prices account for 15-20% of the cost of imports and therefore reducing the cost of transport is likely to increase intra-AU trade to around 25%. In addition, 40% of the final cost of the goods to the consumer is due to the high transport costs.
According to World Bank reports, the dwell time or run time of ships to load or unload their cargo and how long they spend in port is 20 days in ports in sub-Saharan Africa, compared to around 4 days. waiting. in the main ports of the world.
There must be an effort made to remove bottlenecks in African maritime transport through methods such as streamlining administrative processes, increasing port capacity and operational efficiency, storage capacity and connection to the hinterland – this will directly reduce the dwell time and high freight. Cost.
Fleet ownership on the continent is very low and may hamper AFCFTA optimization. Therefore, investments in the acquisition and management of vessels with a strong vessel financing arrangement are required to carry out this program.
The United Nations Conference on Trade and Development (UNCTAD) has indicated that only Nigeria is in the list of the top 35 fleet owner countries with a representation of 0.33% in terms of deadweight tonnage from 2020 while Liberia is the only country in Africa that entered the list of major flag nations with 13% of the world’s total deadweight.
The European Union in the promotion of intra-commercial maritime transport has created the Shortsea Promotion Centers (SPC) in all its coastal Member States to coordinate and collaborate in the smooth movement of goods within a European Shortsea Network (ESN).
African coastal states can adopt such a model to ensure effective integration, interdependence and collaboration between them.
It has become imperative that we prioritize the implementation of the Africa Integrated Maritime Strategy 2050 and the Revised Maritime Transport Charter in Africa to support the necessary growth of the AfCFTA.
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Ee author, Chef Obosu Mohammed is the Executive Director of the Institute for African maritime development. He can be reached via [email protected].
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