Shipping & Logistics

African trade blocs urged to adopt pact and ease commerce

African governments should boost intra-regional trade. FILE photo | nng
African governments should boost intra-regional trade. FILE photo | nng 

Members of African regional trading blocs have been asked to hasten implementation of the Trade Facilitation Agreement (TFA) to reduce cross border trade costs in a bid to grow economies.

Mr Erastus Mwencha, the former Deputy Chairman of the Africa Union Commission, said the efficiency of trade hinges on the support of regional blocs such as the East African Community (EAC), the Economic Community of West African States, and the Southern African Development Community (SADC), in adopting a more open stance on trading with each other.

Mr Mwencha said the TFA would bring about new markets and cost reduction gains. “We must minimise cross border costs in Africa,” said Mr Mwencha.

“When the trade facilitation agreement was introduced globally, it showed that if it is implemented optimally there will be a cost reduction of up to 14 per cent. This will add to the global trade value of about $1 trillion.” Mr Mwencha was speaking at the Kenya School of Monetary Studies during the Second World Customs Organisation East and Southern Africa Regional Conference in Nairobi last week.

It was hosted by the World Customs Organisation Regional Training Centre (WCO RTC Kenya).

Delegates from the Common Market for Eastern and Southern Africa (Comesa), the Intergovernmental Authority on Development (Igad) and SADC attended the conference where they discussed the impact and the implications of the TFA.

The United Nations Conference on Trade and Development (UNCTAD) was represented by Dr Mukhisa Kituyi, its Secretary General, who elaborated on the steps they were taking to accelerate regional development through cross border trade facilitation.

Delegates from Belgium, Ethiopia, South Africa, Malawi, Rwanda, Australia, Mauritius, Botswana, the Comoros, Zimbabwe, Madagascar, Uganda and Tanzania also attended the conference.

Mr Mwencha said implementing the TFA will also help lower the high cost of doing business within Africa, “When African countries trade among each other, for example, the tariff is about 12 per cent but when Africa trades with the rest of the world, the tariff drops to eight per cent. Implementing the TFA addresses these challenges,” he said.

To make this happen, he said, handling and logistics tied to cross border trade should be simplified.

“This includes harmonisation of customs procedures, deepening standards of IT innovation and utilisation to enforce the TFAs and regional trading agreements in the East and Southern Africa region.”

Ms Beatrice Memo, the Regional Training Centre Kenya Chair and Kenya Revenue School of Administration Commissioner, said African countries have complimentary synergies in terms of their competitive advantages which they should leverage to grow their economies.

“In light of this, we need to open our borders to facilitate the growth as customs is now considered a global village. It is for this reason that we co-host this conference with a view of sharing experiences and finding a solution for the African market challenges,” said Ms Memo.

African countries are also exploring closer ties between regional trade blocs through the proposed Tripartite Free Trade Area (TFTA), which brings together three business regional blocs of Comesa, EAC and SADC.

Objectives of TFTA are to promote economic and social development of the region, create a large single market with free movement of goods and services, and boost intra-regional trade.