- With every second person in sub-Saharan Africa living below the poverty line, the need for the continent to rethink its mode of trade has gained impetus recently.
- Currently, total intra-African exports hover around 14 percent compared with 55 percent in Asia, 49 percent in North America and 63 percent in the European Union.
Image: FILE
Calls for intra-Africa trade have been at the heart of conversations geared towards transforming the World’s poorest continent.
With every second person in sub-Saharan Africa living below the poverty line, the need for the continent to rethink its mode of trade has gained impetus recently.
Currently, total intra-African exports hover around 14 percent compared with 55 percent in Asia, 49 percent in North America and 63 percent in the European Union.
This means Africa has a long way to go to achieve its target of 52% trade among each other.
The signing of the African Continental Free Trade Area (AfCFTA) agreement adopted in 2018 remains a major milestone taken by the African continent in pursuit of economic transformation.
The AfCFTA is one of the flagship projects of Agenda 2063: The Africa We Want and the African Union’s long-term development strategy for transforming the continent into a global powerhouse.
It brings together 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs).
AfCFTA's aim of creating a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion is noble.
In its report dubbed Africa’s consumer market potential, Brookings estimates that Africa is home to 1.2 billion consumers today. This is projected to rise to 1.7 billion by 2030.
The potency for future growth in retail and consumer spending is no doubt bright.
For many years, African countries have exported raw materials outside the continent and imported value-added goods.
This has largely been attributed to the lack of manufacturing capabilities.
Another reason cited for mass exports of raw materials is the fragmentation of the markets in the continent.
But as the AfCTA comes into effect, having access to 1.7 billion consumers will incentivize manufacturing locally.
That will occasion a sustainable market, reduced supply chain costs and a growing population of young population to work.
Kenya sits right at the centre of East and Central African trade accounting for 80% of trade through the port of Mombasa and JKIA, the busiest airport for both cargo and passengers.
Nairobi also brags of a vibrant technology community known as the Silicon Savannah which has seen the Kenyan government committed to making its capital the premier destination for tech sector investment and innovation in Africa.
By encouraging entrepreneurship and technology-driven industries, Kenya is already taking advantage of its access to 1.7 billion consumers
Impactful tech companies like Copia Global, Semiconductor Technologies Limited, Twiga Foods, Market Force, and many electric vehicle startups are shaping the gateway to Kenya and East Africa at large.
The robust and growing electric vehicle manufacturing and assembly industry in Nairobi makes Kenya the future of Africa’s two- and three-wheel e-mobility and e-buses.
Recently, I moderated a panel discussion with Ambassador Professor Bitange Ndemo.
The discussion centred on food security in Africa.
Ndemo in his presentation pointed out how intra-African exports will play out.
In his words, if Kenya has excess production of eggs it can be exported to other African Markets and if Uganda, for instance, is producing more milk than the local demand, they can export it to Kenya or another African country.
Africa for instance imports chicken from Spain.
With an open market, African countries can engage in large-scale production and leverage proximity to the market to sell at prices that can give them an edge in the market.
African countries should leverage its good interconnection of road and rail infrastructure to encourage the movement of goods and people.
A surge of Kenyan tourists touring the continent, especially towards Southern African countries is a testament to a step in the right direction.
South Africa in 2023 implemented visa-free entry for Kenya and in just 4 months the number of visitors to South Africa from Kenya tripled.
By the end of the year, Kenya led in the number of tourist arrivals to South Africa unlocking an untapped market.
The move by Ethiopia to allow Kenyan companies to set up operations in its soils underscores the benefits of AfCTA.
Kenya can now import electricity from Ethiopia creating a symbiotic relationship between the two nations.
In February, Kenya exempted Ethiopians from paying the mandatory $30 fee required of foreigners seeking electronic travel authorisation to Kenya.
Currently, citizens of both countries travel without the requirement of procuring a visa.
This is a commendable step in ensuring both countries trade easily with each other.
Kenyan and African entrepreneurs at large should take advantage of the AfCTA to develop top value-added goods with locally sourced raw materials at low costs and edge out imported goods from other continents.
Nelson Amenya is an MBA (Master of Business Administration) student at HEC Paris Business School in France.