Salim Mvurya, Kenya’s Cabinet Secretary for Investment, Trade, and Industry, has urged African countries to address key trade barriers to unlock the continent’s economic potential. Speaking at the Second Edition of the AfCFTA Business Forum, dubbed Biashara Afrika 2024, in Kigali, Rwanda, Mvurya emphasized the importance of overcoming infrastructure gaps and reducing tariff-related barriers to fully harness the benefits of the Africa Continental Free Trade Area (AfCFTA).
Mvurya’s remarks come at a critical time when Africa’s trade within the continent remains significantly underdeveloped compared to other regions of the world. According to Mvurya, less than 17% of Africa’s exports are traded within the continent, a stark contrast to Asia’s 59% and Europe’s 69%. He stressed that Africa must act collectively to develop the infrastructure needed to support trade and industrialization, highlighting roads, railways, ports, and energy as the main areas requiring attention. These improvements are crucial for facilitating the growth of industries and enhancing value chains across Africa.
The Potential of AfCFTA
Launched in 2021, the Africa Continental Free Trade Area (AfCFTA) is an ambitious project aimed at creating the largest free trade area in the world by connecting 55 African countries with a combined market of more than 1.3 billion people and a GDP of over $3 trillion. The goal of AfCFTA is to boost intra-African trade by reducing tariffs, easing the movement of goods and services, and creating opportunities for investment and industrialization.
Mvurya believes that AfCFTA has the potential to revolutionize Africa’s economic landscape by driving the development of industries and value chains that will transform economies across the continent. He noted that AfCFTA’s full implementation could lead to a surge in trade, industrial growth, and job creation, fundamentally altering the continent’s trajectory towards sustained economic development.
However, to achieve these outcomes, African nations must address the challenges that have hindered trade between their economies for decades. These challenges include poor infrastructure, high tariffs, non-tariff barriers, and the fragmentation of markets across the continent.
Infrastructure: The Backbone of Trade
One of the most pressing issues Mvurya highlighted is the lack of adequate infrastructure across the continent. Without well-developed transport networks and reliable energy sources, trade between African countries remains difficult and costly. Goods are often delayed at borders due to inadequate customs systems, and transport routes can be inefficient due to poor road and rail connections. These inefficiencies significantly raise the cost of trade, making African goods less competitive on the global market.
“Mobilization of resources is essential to develop infrastructure such as roads, railways, ports, and energy to power industries and encourage industrialization to enhance intra-trade,” Mvurya stated. He called for collective efforts by African governments, private investors, and international organizations to invest in these critical infrastructure projects.
Improving infrastructure would not only enhance the flow of goods and services but also create an environment conducive to industrialization. Mvurya emphasized that building robust infrastructure is essential for fostering the development of industries that can transform Africa from an exporter of raw materials to a producer of value-added products. This shift is crucial for African economies to move up the value chain and become more competitive in the global market.
Tariff and Non-Tariff Barriers: A Persistent Challenge
In addition to infrastructure, Mvurya addressed the issue of tariff-related barriers, which have long stifled trade between African countries. Despite the establishment of regional trade agreements and customs unions, many African nations continue to impose high tariffs on imports from their neighbors, discouraging cross-border trade. These tariffs, along with non-tariff barriers such as stringent regulations and complex customs procedures, create obstacles for businesses seeking to engage in intra-African trade.
AfCFTA aims to address these barriers by creating a unified trade area where goods and services can move freely across borders. By reducing tariffs and harmonizing trade regulations, AfCFTA is designed to make it easier for businesses to trade across the continent, encouraging investment and promoting economic growth. Mvurya urged African countries to work together to fully implement the provisions of AfCFTA, noting that the benefits of increased trade would far outweigh the costs of tariff reductions.
“The lack of internal trade has hindered Africa’s development for far too long,” Mvurya remarked. “It’s time for Africa to unleash its full potential by addressing the barriers that prevent trade between our countries.”
The Green Supplement and Sustainable Development
As part of its efforts to ensure sustainability in its key agricultural sectors, Kenya is embarking on the development of a Green Supplement as part of its national AfCFTA strategy. The Green Supplement will focus on promoting sustainability in the tea and coffee sectors, two of Kenya’s most important exports. Mvurya stressed that Africa has the opportunity to lead the world in green technology, renewable energy, and climate-smart agriculture.
“Africa can lead the world in green technology, renewable energy, and climate-smart agriculture. We must invest in sustainable practices that not only drive economic growth but also safeguard our continent for centuries to come,” Mvurya stated.
This initiative aligns with broader global efforts to combat climate change and promote sustainable development. By investing in green technology and renewable energy, African countries can not only reduce their carbon footprint but also create new industries and job opportunities in the growing green economy. Mvurya noted that AfCFTA could serve as a platform for promoting sustainable development across the continent by encouraging trade in environmentally friendly products and technologies.
The Guided Trade Initiative Phase II: Expanding Trade in Services
During the Biashara Afrika 2024 forum, the AfCFTA Secretariat launched the second phase of the Guided Trade Initiative, which now includes services in addition to goods. The expansion of the initiative to cover services is a significant step in enhancing trade within Africa, as services account for a growing share of global trade. The inclusion of services in AfCFTA will allow African countries to capitalize on the growing demand for sectors such as information technology, financial services, and tourism.
The expansion of trade in services is particularly important for African countries seeking to diversify their economies and reduce their reliance on commodity exports. By promoting the growth of service industries, AfCFTA can help create new sources of income and employment, driving economic development across the continent.
The Road Ahead
Mvurya’s call to action at the Biashara Afrika 2024 forum underscores the urgency of addressing the barriers that have long hindered trade between African countries. While the potential benefits of AfCFTA are immense, realizing these benefits will require collective action by African governments, businesses, and other stakeholders.
Infrastructure development, tariff reduction, and sustainable practices are all essential components of a successful AfCFTA implementation. By investing in these areas, African countries can unlock the full potential of intra-African trade, creating new opportunities for economic growth, industrialization, and job creation.
As Africa moves forward with the implementation of AfCFTA, it is crucial that leaders continue to work together to address the challenges that remain. With the right policies and investments, AfCFTA has the potential to transform Africa’s economic landscape and set the continent on a path towards long-term prosperity. Mvurya’s vision of a continent united by trade and investment offers a compelling roadmap for Africa’s future.
