Africa opens world’s largest single market (1)
Dr. Oyeleye, a consultant, journalist and policy analyst, can be reached via:
January 4, 2021581 views0 comments
HISTORIC DAY OF January 1, 2021, must have been a special and memorable one for Africa. Unlike other such days of previous years, this particular day in 2021 marked the day of the commencement of trading on the platform of the African Continental Free Trade Area (AfCFTA). While the umbrella body of African Union (AU) must have had cause to celebrate a rare feat on political and economic fronts at the same time, it will be interesting to know how individual nation states respond to the new continental economic order in the immediate aftermath and in years ahead.
To the framers and implementers of AfCFTA, the minimum number of countries required for its take-off have signed up, the most recent being Nigeria which delivered the instrument of ratification and participation few weeks ago, early in December. So, those who had sleepless nights about Nigeria’s reluctance to participate at the very onset could now have sound sleep. There are however many issues to overcome in theory and practice before their euphoria and expectations could translate into real accomplishment. Let’s start by examining some key issues.
Africa is a continent made up of 54 countries. Although bound together as a continent, many things separate the countries. First is the legal distance. The fact that these are all separate countries means that they have 54 separate legal and constitutional underpinnings as sovereign nations. Various issues that overlooked these fundamental differences in the build-up to AfCFTA during the drafting of its operational documents will require a lot of modifications in practice when realities begin to unfold. Some countries will have to take AfCFTA-related issues to the highest courts or the highest legislative bodies in their countries for settlement as enabling steps for their smooth participation.
Linguistic distance is another. The various countries of Africa have historically been divided along linguistic and cultural lines. The primary working languages at national levels are Arabic, English, French, and Spanish, with Portuguese and Swahili being developed. Moreover, the traditional global delineation that puts North Africa together in the same geo-political zone with the Middle East creates its own social, political, cultural and economic bonds and complications when these indices come into play in Africa. For instance, countries of North Africa use Arabic more as national language and English as subsidiary, while Swahili is widely spread in Eastern Africa, alongside English language. Many countries of West and Central Africa are strictly Francophone, with just a few bilingual (as in Cameroon and very recently, Rwanda).
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The language factor, which is also of historical relevance, is a strong factor in the strong monetary union such as the West African Economic and Monetary Union (WAEMU) that is an exclusive club of Francophone West Africa countries. Although Mozambique, Angola, Guinea Bissau and Cape Verde are Portuguese speakers, they are spatially separated. Among them, only Mozambique and Angola seem to be closest in space. Discussions about language here ignore the thousands of ethnic nationalities and concentrates only on official country languages, mostly originating from the colonial histories of countries. The critical mass of how many countries share same language will determine a lot in terms of strengths and weaknesses in the new continental trade arrangement as more than half the number of countries are English-speaking, 14 are French-speaking and Equatorial Guinea is the only Spanish-speaking of all African countries. The countries of North Africa that depend on Arabic language are also in the midst of two opposing civilisations – one originating from the West and another from Central Asia, with trade commitments to many distant countries other than those in Africa.
Spatial distance is a major challenge that the trading African countries will have to contend with right from the outset. Africa’s land is expansive, with about 30.2 million square kilometers, covering one fifth of the earth’s total land area and larger than the United States, China and continental Europe combined – or with Brazil if Europe is excluded. The continent’s infrastructural needs are therefore enormous. Currently, Africa still suffers from large infrastructural deficit, which makes it susceptible to any form of external supports, including those coming from countries that have transactional and expansionary motives on top of their agenda – as in the case of China in its Belts and Road Initiative. Unfortunately, Africa is currently ill-equipped to bridge its infrastructural gaps from within. And, with persistent infrastructural deficit, Africa’s progress with AfCFTA will be slow and the member countries will operate from the position of weakness for the time being. This therefore poses a huge challenge for the African Union, the continental development Bank (AfDB) and other continental institutions to work hard on boosting the infrastructural capacity of Africa as a pre-requisite to a successful intra-African trade bloc.
A key area of infrastructural development that Africa most urgently needs is that which enhances transportation, within and between countries. Trade involves the movement of goods and services. In Africa, a lot of movement of goods have to be done and this requires good transportation and appropriate transportation channels. Road transportation has been with a lot of problems, including the rules for driving on the road, from the left hand of the road in one country to the right hand in another. Transporters from Rwanda going to Kenya need to adapt to the left hand-of-the-road rule in Kenya, and vice versa. Moreover, the road infrastructure in many African countries is in a deplorable state that puts travellers’ and goods in danger. Among such dangers is insecurity and threats to travellers’ safety.
The 17 landlocked countries in Africa remain at perpetual competitive disadvantages, for instance, as they depend on nearby countries with seaport to facilitate a lot of international trades involving heavy freights. So far, only few countries have rail linkages with other countries, the latest being the Ethiopia-Djibouti railway, which was completed in 2017, and now transports passengers and goods across the 759 km journey, boosting Ethiopia’s import-export industry. Almost all of Africa’s regional economic communities (RECs) are backward in terms of transportation infrastructure at national and regional levels. To facilitate AfCFTA therefore, road and rail infrastructure will need an extensive overhaul and many countries within and between RECs will need to be connected, especially by rail because of its relative speed, safety and haulage capacity, in addition to passenger capacity.
Considering goods and services that need to move faster, Africa’s aviation industry is not yet ready for AfCFTA. Despite the 731 airports and 419 airlines operating within Africa and between Africa and the rest of the world, according to a 2018 OECD report, only one of the three major sub-Saharan intercontinental airlines is in a good state of economic health. That is, apart from the Ethiopian Airlines, Kenya Airways and South African Airways are struggling. Also, the Open Skies Treaty, or the Single African Air Transport Market (SAATM), that is expected to boost Africa’s economic integration agenda, cannot exist in a vacuum. It has to be in tune with the trade relations evolving from AfCFTA. This calls for the liberalisation of civil aviation in Africa, a point made in a 2018 publication on Single African Air Transport Market by Deloitte, a consultancy. The Deloitte’s research and other conversations pointed out the reality that “the low commitment from AU Member States is likely to be brought on by the treaty’s lack of a proper implementation framework.” The continent still has a long way to go in the integration of the aviation market. Millions of dollars of revenues and incomes are being lost to protectionism, high taxes, and restrictive regulations in Africa’s regional aviation industry as many African countries restrict their airspaces as a strategy for propping up state-owned air carriers. This explains, in part, why it is so difficult for private airlines to succeed in Africa.
Very recently, some African airlines had more difficulties penetrating other African countries than many foreign airlines from outside Africa, in apparent fear of domination. For instance, Air Peace, a Nigerian private airline, complained about difficulties in gaining operational access to some countries in the West African regional markets. A report published by Foundation for Economic Education disclosed that “it took several years of negotiations for fastjet, a low-cost private airline based in Tanzania, to get the traffic rights to fly” within Zimbabwe’s domestic routes. The report was emphatic that “it had originally taken three years for fastjet to even begin its operations in Zimbabwe, let alone dare to expand its domestic flights in the country.” These are just samplers. The impacts of these policies could have far-reaching impacts on AfCFTA operationally.
Without smooth transportation, by air, road, rail or sea, AfCFTA will remain more of a wishful thinking for many countries in years ahead. Making AfCFTA work will therefore require concerted work, in synergy, by various countries and RECs, with the purpose of bridging the existing gaps between them. Africa needs to look into these and other forms of distances within that have held the continent back for decades and find urgent and workable ways of bridging the gaps. As the various physical and virtual distances emerge, leaders of thought, politicians and diplomats have ever-increasing challenges and onus to deal with them and provide ways to minimise their hurdles while preparing the continent to make economic progress. They need to make these distances irrelevant very quickly if Africa is to move forward in any meaningful way.