African free trade agreement is a golden opportunity

Published Sep 29, 2019

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Key events this week, all somehow linked to trade relations, must remind Africa about the opportunities it could be toying with and how easy it is to destroy value.

First was the demise of Thomas Cook, a company which traces its origin to 1841, leaving scores of travellers stranded. The second one was trouble at 10 Downing Street, ruffling Boris Johnson’s hair even more over that perennial British pastime, Brexit. The third was the ongoing border tiff between west Africa’s David and Goliath: Benin and Nigeria.

All these events are made relevant and interlinked by the latest fad: the African Continental Free Trade Agreement (AfCFTA). Ratified in July, AfCFTA is not a fad, but given Africa’s history of great policies and poor implementation, it might as well be.

When it came into effect,

one thing was clear: there would

be a single African market of more than 1.2 billion people to which African countries would be able to sell their wares without needless barriers. Every intra-country indicator is pointing upwards, meaning that if African countries could unearth immeasurable trade and investment revenue by doing business with each other.

Travel and tourism contributed 8.5% of Africa’s gross domestic product in 2018, equivalent to $194.2 billion (R2.9 trillion), according to the 2019 Jumia Hospitality Report. This places Africa second only to Asia in the high growth stakes of world tourism trends; expanding 5.6% against the global average of 3.9%.

The tragedy of an iconic company like Thomas Cook folding is but the flip-side of the powerful lesson for all of us, especially Africans. Nothing is too big to fail.

Africa’s most successful airline is owned by a government. Ethiopian Airlines anchors its growth trajectory on Africa’s largest airport, Bole International in Addis Ababa. It is the interconnectedness of the world, not isolation that holds the key to success in the new order.

Every disaster akin to the death of Thomas Cook presents to us a chance to cash in. Where one airline fails, another can assert itself. RwandAir has demonstrated its ability to open routes where its bigger and older competitors are failing or not looking. This is not going to work, however, if border disputes become commonplace.

Nigeria has no business wrestling a minnow like Benin or any of its neighbours. Smuggling or no smuggling from Benin, it is focusing on the wrong problem. Despite rising local production, 8.9 million tonnes of rice between 2013 and 2017, demand still exceeds supply. It can plug this gap by increasing local production even more or finding progressive ways to facilitate legal imports. Closing borders is a no-no.

Recently, Rwanda and Uganda had a tiff over threats to internal stability to the point of blocking some border gates between them. Each country has a case, but the small window to increase intra-Africa trade and collaboration will close soon unless they learn to work together.

World trade and investment are floundering, thanks to the likes of US-China trade wars. This gives Africa a shot at redemption, provided it acts strategically, decisively and quickly. Nothing, including this golden opportunity, lasts forever. Africa can grab it or leave money on the table for non-Africans, yet again.

Kgomoeswana is author of Africa is Open for Business; media commentator and public speaker on African business affairs.

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