13 July 2018 ( Lagos )Today analysts turn their attention to the ongoing African Export-Import Bank (Afreximbank) annual meeting in Abuja. The general theme is Promoting African trade and economic transformation. A core stimulus for enhanced intra-African trade is the number of landlocked countries on the continent. 

There are 16 out of 55 African countries that are landlocked, relying to some degree on their coastal neighbours for extra-African trade through their ports and shipping lines. However, trade among landlocked countries has been low. As for the African Continental Free Trade Area (AfCFTA) to boost intra-African trade, it has garnered mixed views since its formal launch earlier this month.

During a fireside chat on the progress of AfCFTA, Albert Muchanga, the African Union (AU) commissioner for the department of trade and industry, expressed optimism that by end-December all 55 signatures for the agreement will be in place. There are currently 49 signatures. Analysts understand  that member states will have the option to exit the area after five years. 

Understandably, Nigeria is one of the countries that is yet to get on board. Given its huge consumer market as well as its high import appetite, it is important that the agreement is examined extensively so as to safeguard local industries and avoid the dumping of goods into the local market.  

Zambia has also delayed its signature due to stakeholder consultations.

During a panel discussion geared towards the private sector, Bassem Loukil, a Tunisian captain of industry and CEO of Loukil Group, expressed dissatisfaction over the exclusion of business communities across Africa during the process of establishing the area. The major players in trade are from the private sector, he argued, and therefore they should have had the opportunity to negotiate terms before Tunisia signed the agreement.

Loukil also raised telling points around issues which could limit the success of the area. These included logistics such as cumbersome shipping routes. Analysts learnt that shipping goods to Nigeria from Tunisia requires that they pass through European ports before reaching their destination.

Organisation, insisted that trade barriers hurt consumers. However, each African country needs to develop the appropriate industrial, trade, standards, education and skills policies in order to gain the best out of the area.

The representative of Nigeria’s chief trade negotiator noted that, although all stakeholders are not supportive of the AfCFTA, specific segments such as the fashion, digital and film industries as well as banking and finance are export-ready, and look forward to potential market access.

Protectionism and trade barriers are part of a seemingly revived narrative globally, which could have an adverse effect on African economies. Therefore, firming up a formidable bloc that would promote and develop trade between African countries should be strongly considered. However, it is imperative that structural challenges are first overcome to allow each country to compete effectively.

Source : Gregory Kronsten, Olubunmi Asaolu, Chinwe Egwim from FBNQuest Capital Limited.

Reporting for EasyKobo on Friday, 13 July 2018 in Lagos, Nigeria