Sola Adegbesan, head of African regions at Absa Corporate & Investment Banking, called on African countries to more actively develop bilateral trade relations that would complement the African Continental Free Trade Area (AfCFTA). In his view, the continent has significant potential to meet its own needs, but still depends on external markets and logistics routes.
As TimesLIVE reports, in a statement earlier this year, the South African government estimated the country’s trade under AfCFTA preferential terms over the two years to February at 2.6 billion rand. This involved products ranging from mining equipment and electrical machinery to food, clothing and plastics. This is still a modest figure relative to South Africa’s overall trade, but the AfCFTA mechanism is beginning to materialize in concrete commercial transactions.
Logistics barriers
Adegbesan noted that there are few direct freight routes between African countries. As a result, goods that could move relatively quickly, for example between South Africa and Kenya, sometimes first travel on large international vessels to Europe and then return to the continent. This lengthens and increases the cost of transportation.
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As an example, the author cited Nigeria, which produces oil needed by many African countries. A significant share of this raw material is sold outside the continent, processed in other countries, after which African markets buy it back at a higher price.
Agreements based on mutual demand
In Adegbesan’s view, the AfCFTA should be accompanied by targeted agreements between countries whose needs and capabilities already align. If one country imports from Europe a product that another African country can supply, and the latter needs goods, services or technical capabilities from the former, this opportunity should be identified and agreed directly.
The author also stressed the role of governments in supporting investment projects. According to him, trade partners outside Africa establish export credit agencies, financial programs and mechanisms to support companies, making it easier to finance deals. He advised African governments to consider the long-term economic effect of tax incentives and allow private operators to manage major projects, while retaining a significant minority stake for the state.
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