For years, the dominant narrative around Africas low levels of intra- continental trade has centred on tariffs. The belief is simple: Africa doesnt trade with itself because import duties between African countries are too high. But, according to Francois Fouch, research fellow at the Centre for African Management and Markets at GIBS, this is the single biggest fallacy in the intra- Africa trade debate and it could not be further from the truth. Tariffs are not what is holding Africa back, says Fouch. Non- tariff barriers are. Under the African Continental Free Trade Area AfCFTA, most African states have already negotiated a phased reduction in import tariffs on the majority of goods over the next decade. That is positive. But tariff reductions on their own will not increase intra-Africa trade. The real obstacles are far more practical and far harder to solve. According to Fouch, the real drag on intra-African trade lies in infrastructure and border efficiency the day-to- day realities that traders and logistics operators face, such as poor road networks, congested and inefficient border crossings, limited digital systems, outdated customs processes and inconsistent enforcement across borders. You can lower tariffs to zero, but if there is no quality road to the border, if the border post itself lacks modern electronic systems and efficient procedures, then trade does not accelerate, he told Freight News. Goods move where they can move easily. Right now, for many African businesses, it remains faster, cheaper and simpler to trade beyond the continent than within it. Africa trades more with markets outside the continent not because those relationships are inherently stronger, but because in many cases it is easier to trade beyond Africa than across our own borders. Yet our policy focus often remains on reducing formal import tariffs from African countries when tariffs are neither here nor there, says Fouch. What matters is how easy, quick and cost-effective it is to move goods to the border, and then to process them across that border. Until we make it as straightforward to trade with our African neighbours as it is to trade outside the continent, intra-African trade will not meaningfully increase. Using the European Union EU as an example, Fouch says if Africa wants intra-Africa trade to reach European levels, it will have to reduce border hurdles the way Europe did. The EU effectively removed physical borders among most of its member states. When borders disappear, trade flows. In Africa, the opposite remains true. Borders are still cumbersome, costly and inefficient. Entrepreneurs are often incentivised to avoid formal crossings altogether, and informal trade and smuggling flourish. Reduce the barriers and formal trade will grow. At the same time, increasing Africas productive capacity is equally vital. Africa will trade more with itself when it has more to sell to itself. Trade complementarity matters. The more diverse your production base, the more products you can export and the more markets you can reach. LV
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The facility aims to run three trains daily between Estcourt and the Port of Durban in the near future.
