The AfCFTA is gradually entering full implementation, but supply chain configurations between African countries remain unsustainable for intra-African trade. Supply chains are not only affected by poor infrastructure and high costs, but also by insecurity. Adebayo Adeleke and Teniola Tayo suggest a number of policy options to aid stakeholders to manoeuvre these challenges as they implement the AfCFTA trade bloc
Shared colonial history resulted in many African countries developing similar trade flows, with transport infrastructure set up to move raw materials out of the former colonies and bring in finished goods from the colonial empires. Sadly, many African countries have not been able to change this trade pattern several decades later, which is one reason for Africa’s lack of industrialisation.
The African Continental Free Trade Area (AfCFTA) seeks to correct these colonial trade flows by boosting intra-African trade. As the AfCFTA gradually enters full implementation, a vital question that will be raised is the supply chain configurations between African countries and how suitable they are for intra-African trade. The high cost of transportation within Africa is considered one of the major non-tariff barriers that could affect the success of the AfCFTA. According to the African Development Bank, costs related to logistics can increase the price of goods traded within Africa by up to 75 per cent.
Yet, intra-African supply chains are not only affected by poor infrastructure or high costs. Supply chains are also faced with the challenge of insecurity; a rising threat spread across the continent.
These include violent extremism, banditry, transnational organised crime, and others. The over-dependence on land routes for cross-border trade makes African supply chains vulnerable to violent conflict.
Violent extremists along transport routes and the excesses of military personnel securing some of these routes pose a major challenge to supply chains. The main hotspots include the Boko Haram-affected areas in the Lake Chad Basin, including parts of Nigeria, Cameroon, Chad, and Niger; the conflict in the Sahel region; the al-Shabaab and the Islamic State crisis; and others. Within the AfCFTA context, this means that some of the cross-border transport routes are not viable. The insecurity along these routes forces traders to use longer and less efficient routes or risk their lives and property. Extortion along these routes by military personnel also forces traders to transfer costs to the consumers, which reduces the competitiveness of their goods.
The insecurity on some routes has resulted in governments responding by blocking their access to non-security personnel. All these have contributed to the decline of cross-border trade in the region and present a risk to the implementation of the AfCFTA.
For the AfCFTA to achieve the objectives of increased intra-African trade and trade-driven industrialisation, African imports need to be competitive.
Transnational organised crime
Transnational organised crime is a security issue that also challenges cross-border trade in Africa. Its impact on the AfCFTA can be significant but indirect, as it can affect countries’ trade openness and their tendency to establish non-tariff measures to hinder cross-border trade. One example was Nigeria’s land border closures to curb smuggling.
Concerns about the movement of crime-related goods like arms or drugs across borders can lead to increased cargo scrutiny and delay border clearance processes.
Tensions within and between African countries can affect trade openness. Political instability often causes countries to retreat inwards and disengage from regional efforts. The recent spate of coups in West and Central Africa has resulted in some contestation between affected countries and regional arrangements such as ECOWAS.
These factors have trade-limiting effects between African countries and hinder the successful implementation of the AfCFTA.
Policy options for stakeholders
To aid the implementation of the AfCFTA and mitigate risks, responsible stakeholders like national governments, regional entities, the private sector, civil society, and external partners have some policy options to consider:
- National governments must identify the most impactful internal and external supply chains and prioritise them for infrastructure development and security provision. They should also facilitate better communication and collaboration across the public service to allow trade and security agencies to work together and support their respective mandates. It is also crucial to reframe the character and roles of customs and border authorities. Extractive mindsets unwittingly facilitate cross-border crime.
- Regional entities must use a people-centred approach to security cooperation. This includes sustained engagements and consultations with border communities to understand and address cross-border threats.
- More private sector participation is needed to address the underlying socio-economic issues and relative deprivation that lead to several conflicts in Africa. Private sector actors should also improve information sharing with government actors about observed security threats within the spaces they operate.
- African civil society groups need to be convinced of the importance of securing cross-border trade and make this one of their advocacy priorities.
- External partners should ensure that support for trade integration projects in Africa has a security component – and vice versa, to allow a better allocation of funds to these priorities. The funding of trade security initiatives should be sustainable to prevent a deteriorating situation at the end of funding cycles.
As African countries prepare for and anticipate the full implementation of the AfCFTA, there is a need to confront the reality of the risks posed to the agreement’s success. Although peace facilitates trade, when carefully managed, trade can facilitate peace. Understanding trade as a tool for peacebuilding creates a sense of urgency for all actors to ensure that African supply chains are not compromised by security threats but instead protected from them. Doing this will contribute to other efforts to ensure the success of the AfCFTA, and the actualisation of the agreement’s promise to bring development to all Africans.
Photo: 10th Extraordinary Summit of the African Union | Kigali, 21 March 2018. Credit: Paul Kagame on Flickr. Licensed under CC BY-NC-ND 2.0