Why intra-Africa trade is lower compared to trade for other continents

By Elias Hakiziana.

Experts are meeting in Kigali to discuss the implementation of the African Continental Trade Area in Eastern Africa with focus on free movement of people, leveraging new opportunities, harnessing AFCFTA for gender equality, energy security, balance of payments constrains on economic growth and its relevance to intra-trade.

They are discussing along the 22nd meeting of the Intergovernmental committee of experts in Sub-regional Office for Eastern African that started on 20th to end 21st November, 2018.

One of the challenges to fast-tracking common interests in Africa is still lower Intra-Africa trade due to political factors in terms of how African countries gained iindependence, the experts gathered in Kigali for a conference on advancement of free trade zone told the press during the opening session.

Giovanie Biha, Deputy Executive Secretary of United Nations Economic Commission for Africa that is providing technical support in AFCFTA said that lower Intra-Africa trade is due to political factors in terms of the way African countries came into independence.

There are also economic factors, she said, in terms of economic structures that countries have inherited but also structure of production and kinds of products that countries have been trading   within the continent and external world.

 “Most of our countries are still actually trading raw materials most of which going to the external world not between African Countries We should be proud of consuming of what we produce and enhance capabilities of countries to manufacture certain products and the whole campaign of producing and consuming locally,” she said.

“We have not transformed our economies and produce a number of products that were finished goods which we could actually consume ourselves. We have always relied to the external world to be able to buy products and imports those products. We have moved and we are moving, to debate how countries are transforming economies and how they are industrializing,” she noted.

She said that AFCFTA, it is really the opportunity to open the markets and be able to exchange the goods that Africa is producing.

“Reports have indicated how, among the sub regional countries in Eastern Africa, the products being exchanged are those of value added. This is a very good story of Continental free trade area,” she mentioned

According to Soraya Hakuziyaremye, the minister of trade and industry in Rwanda “Africa was lagging behind in continental integration as far as trade is concerned. Intra-Africa trade is at 12 per cent compared to 63 % in Europe and elsewhere but this has to change,” she said.

She observed that 49 countries have ratified to AFCFTA with 11 countries that have ratified while it requires 22 countries to ratify and enter into force in March 2019.

“We hope AFCTA will enter into force. 11 countries have ratified compared to the required 22 ratifications for it to come into force” Hakuziyaremye added.

Mathias Kasaija, the minister of finance in Uganda said that considering that Africa was colonized by European powers, became their markets and source of materials, it has led Intra-Africa trade to stay lower compared to other continents.

“Because we have no single government of Africa, each country has its own relationships it wants to trade with such as former colonials and other powerful nations beyond Africa. It will take us time to change the system, minds, ideas but leaders on the continent have seen this. Let’s stand as East Africa and as Africa, “he said.

To have countries ratifying to ACFTA, there are number of officials to pass through parliamentary processes depending on the countries and some have probably started. Other have still fear about the benefits. We need to support some of them by explaining the cost analysis of AFCFTA and benefit so that they do not fear to enter the three trade area,” he added.

The elimination of tariffs and non-tariffs barriers called for by the AFCFTA will improve development prospects for Eastern Africa.

As the ACFTA comes into implementation, the value of exports of Eastern Africa to the rest of the continent would increase by almost a third, with processed food and manufactured products which is incentive to agro-industries according to experts.

The ACFTA was signed on 21st March 2018 and will enter into force next year on March, 2019 after having at least 22 countries ratified it.

The Intra-Africa trade and an integrated market in Africa will see a market of over 1 billion people with a GDP of approximately US$2.6 trillion.

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Elias Hakizimana

Elias Hakizimana, CEO&Founder of The Inspirer Ltd,(www.rwandainspirer.com) is a professional Rwandan Journalist with Bachelor’s Degree in Journalism and Communication, received from University of Rwanda’s College of Arts and Social Sciences (CASS) in 2014. He served various media houses in Rwanda including Rwanda Broadcasting Agency (RBA) in 2013 and became passionate with English Online and Print Media Publications where he exercised his talent as a Freelance News Reporter for The New Times, The Independent, The Rwanda Focus, Panorama and more before he became a Self-Entrepreneur as the CEO and Founder of The Inspirer Limited in early 2017.

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