The Department of Trade, Industry and Competition (DTIC) has embarked on provincial outreach and awareness workshops in collaboration with provincial governments, wherein it hopes to have engaged all provinces on the African Continental Free Trade Area (AfCFTA) by the end of July.
The DTIC is also developing an AfCFTA implementation plan, including the establishment of a national implementation committee and a targeted strategy for the implementation of the AfCFTA.
“The AfCFTA brings us a step closer to realising the historic vision of an integrated market in Africa. For sustainability and legitimacy, Africa’s integration must deliver shared benefits,” DTIC director-general Malebo Mabitje-Thompson said during a webinar on the operationalisation of the AfCFTA on July 25.
She added that trade integration and liberalisation should be accompanied by programmes to support African industrialisation and regional value chains.
“Coordinated efforts and inclusion of AfCFTA across all of government and relevant stakeholders to ensure the benefit of AfCFTA opportunities to all of South Africa’s private sector is imperative,” Mabitje-Thompson said.
She explained that, for the successful implementation of the AfCFTA, a doubling of road freight will be necessary, increasing from 201-million tonnes to 403-million tonnes.
The agreement also calls for the provision of about 1.8-million trucks for bulk cargo and 248 000 trucks for container cargo by 2030.
The estimated investment required for the road freight aspect amounts to about $345-billion.
In terms of rail freight, the AfCFTA aims to enhance it by 52 times, growing from 760 000 t to 39-million tonnes. To achieve this, the agreement mandates the addition of 97 614 wagons for bulk cargo and 20 668 wagons for container cargo by 2030, with a net investment estimated at $25-billion.
Maritime freight will also demand a significant investment of about $36-billion, as the implementation of the AfCFTA aims to double maritime freight from 58-million tonnes to 131.5-million tonnes. To achieve this, 126 vessels for bulk cargo and 15 vessels for container cargo will be required by 2030.
Air freight will also need significant investment, estimated at $4-billion. The AfCFTA implementation would double the amount of tonnes transported by air from 2.3-million tonnes to 4.5-million tonnes. Meeting this goal would necessitate the addition of 254 aircraft by 2030.
Moreover, about $100-billion of investment would be required to bring the continent’s digital infrastructure up to the required standard for the AfCFTA to function properly.
This would be comprised of about $18-billion investment into information and communication technology skills and content, about $2.4-billion into policy and regulation costs, about $53-billion into network operations and maintenance and about $29-billion into infrastructure capital expenditure.
Mabitje-Thompson said that, while transborder infrastructure would be expensive to build and costly to maintain, the success of the AfCFTA depended on it. She noted that securing finance from regional banks and development fund institutions was key.
She stressed the importance of achieving AfCFTA success, since Africa accounts for 17% of the world's population but contributes “very little” to global economics – something that Mabitje-Thompson believed should change.
Despite Africa’s rich array of natural mineral resources, renewable energy resources, and abundance of arable land, it constitutes only 4% of the global gross domestic product and only 2% of global manufacturing. The share of global trade attributed to Africa is only about 3%.
Intra-African trade accounts for merely 16.3% of all African trade. When comparing these figures with the rest of the world, it becomes evident that Africa engages in the least internal trading of any other continent. Intra-North American trade is at 49% of all trade, intra-Asian trade at 55%, while intra-European Union trade sits at 63%.
Mabitje-Thompson noted that the AfCFTA held much potential, since the African market remained significant for African exporters. She noted that, currently, 22 African countries have identified other African nations as their primary exporting partners, with five countries considering them the second most important market.
Hence, intra-African trading has already started, although the majority of intra-African trade, about three-quarters of it, occurs within regional trading blocs.
Mabitje-Thompson also noted that, while Africa's exports to the rest of the world predominantly consist of commodities, intra-African trade primarily revolves around value-added manufactured products.
In total, 54 out of 55 African Union countries have now signed the AfCTFA Agreement, including South Africa. In February, 47 of those African countries ratified the agreement, with Botswana, Comoros and Mozambique being the most recent countries to do so.
Only Libya, Sudan, South Sudan, Somalia, Madagascar, Liberia, Benin and Guinea-Bissau remain unratified.
Eritrea remains the only country on the continent to not have signed the AfCTFA at all.