Africa’s Future Lies in Free Movement of Goods and People Within its Borders

By Soko Directory Team / January 30, 2016



Africa Economy

Someone once asked me what I know about Angola, and I excitedly started to list all the things I had seen, and read on numerous books and watched in TV channels. When I was finished, she asked me if I had been to Angola and if I know these things to be true. I said I hadn’t. She then remarked that it was a pity that we Africans know about each other from what other people tell us. In that moment and in the context of her statement I understood the gravity of the issue. That what we hear and see about our trading partners are things that may be far from reality when we visit and trade together. We are unaware of the opportunities that exists within Africa yet we are a home to world leading economies in resource abundance and high market potential.

This week’s state visit by Nigerian President His Excellency Muhammadu Buhari,  a year after his predecessor, shows the increasing realization by African leaders of intra-Africa trade and investment opportunities.While Kenya is a member of the East Africa Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Tripartite Free Trade Area (TFTA), Nigeria is a member of the Economic Community of West African States (ECOWAS). Both the Tripartite and ECOWAS regional trading blocs constitute a market opportunity of about 950 million people out of the Africa population of about 1.1 billion people.

The two Countries or regions have the opportunity to to speed the realization of the Africa Continental free trade area expected to be achieved by 2028. Towards this end, Kenya and Nigeria signed a bilateral trade agreement on 6th September, 2013 with the objective to enhance trade and investments in agriculture and agro industry, horticulture, manufacturing, solid minerals, tourism, oil and gas and financial services. A Kenya Nigeria joint business council has been established to oversee improvement of trade and investment between the two Countries. Kenya has a competitive advantage, in part, in agriculture and agro processing while Nigeria is rich in the extractive and solid mineral sectors forming a strong basis for trade and investment development. Over the last decade, Kenya exports averages Kshs.2 billion while imports averages Kshs.313 million between 2004 and 2014 making Nigeria a significant trading partner for Kenya. The two Countries have committed to double their trade and investment levels in five years. In 2014, Kenya’s share of world exports was 0.03 per cent. 33.5 per cent of these exports are from the manufacturing sector. On the other hand, the countries share of world imports is 0.10 per cent pointing to the growing trade imbalance with surging imports. Africa share of global trade trade is 2 per cent which is still low.  There therefore an enormous potential to enhance Kenya’s with the rest of Africa particularly in growing the manufacturing sector with a view to enhance exports of value added products.

Kenya and Nigeria are examples of many African Countries that have shown interest to trade among each other. There are increasingly growing interest by other African countries to trade with Kenya including Ethiopia, South Africa, Angola, Democratic Republic of Congo, Egypt, Ghana, Tunisia, Algeria, Sudan, South Sudan, Morocco, Democratic Republic of Congo (DRC) and Mauritius. The deepening of regional integration in Africa has also positioned the continent as a leading destination for trade and investments to Countries in Europe, North America and Asia. There are initiatives such as the Indian Ocean Rim Association, the African Growth and Opportunity Act (AGOA) and Economic Partnerships Agreements (EPAs) which are aimed at enhancing trade and investment between Africa and the rest of the World.

Africa full potential in trade and investment is however constrained by many challenges that are yet to be addressed which include inadequate infrastructure, existence of tariffs and nontariff barriers, high costs of energy, overlapping regional trading arrangements, perennial conflicts, illicit and counterfeit trade, stringent regulatory environment, tariff escalations, dumping, and inefficient ports. The 2014 DHL Global Connectedness Index, and the world bank logistics performance index respectively shows the African continent as the least globally connected and least logistically efficient region in the World reducing the gains from intra-Africa trade and investments. Further, Africa continues to rely on exports of raw products to traditional markets. Further, with the surge in importation of competitive products in a liberal economy, value addition of exports has continued to contract inhibiting the growth of the manufacturing sector. The manufacturing sector is key to Africa economic growth needing more support by the governments within the existing national and global best practices. Africa economic growth and development lies with maximizing the intra-Africa trade and investment opportunities. African Governments need to invest more in addressing the challenges that will enhance intra-African trade both in the medium and long term.


 

The writer is the CEO of the Kenya Association of Manufacturers and can be reached on  [email protected]kam.co.ke



About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author








Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE

ARCHIVES

2019
  • January 2019 (256)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (252)
  • July 2019 (340)
  • August 2019 (227)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (257)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (187)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (246)
  • June 2016 (183)
  • July 2016 (271)
  • August 2016 (249)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (109)
  • May 2015 (117)
  • June 2015 (121)
  • July 2015 (150)
  • August 2015 (157)
  • September 2015 (189)
  • October 2015 (170)
  • November 2015 (174)
  • December 2015 (208)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950