Ideas & Debate

Removal of trade barriers good for Africa

port

The port of Mombasa. Kenya performs well in handling export shipments. FILE PHOTO | NMG

According to the World Bank’s Ease of Doing Business Report, 35 of 47 economies in Sub-Saharan Africa took at least one step in making it easier to do business in their country in 2015. Towards the end of 2018, Kenya has shown significant improvement to be position 61 with Rwanda and Mauritius scoring well too.

Some of the highlights included Rwanda implementing a credit-scoring service; Kenya launching government-run company registration services; Madagascar strengthening minority-investor protections; and Equatorial Guinea taking the registration procedure for new businesses from 16-plus steps down to four, and the processing time from 120-plus days to 10.

As new businesses are created and more advanced technological solutions grow across global markets, as oil-based economies work to diversify, business-to-business and intra Africa trade will see more growth. Urbanisation and business clustering is the appearance of more and more clusters throughout Africa.

Thanks to rapid urbanisation, these clusters, “stimulate productivity, innovation and creation of new businesses”, in turn increasing the private sector driving economies, which will create employment and check insecurity.

In 2012, the 54 Member States of the African Union agreed to establish the Continental Free Trade Area (CFTA) by 2017. The CFTA is widely seen as a crucial driver for economic growth, industrialisation and sustainable development.

The signing of the African Continental Free Trade Agreement AfCFTA agreement was a major step towards regional integration and is also expected to lead to the elimination of 90 per cent of tariffs by 2022. I strongly believe that it will increase trade between Kenya and the rest of Africa — and global markets — resulting in a stronger balance of trade.

African governments should increase support for cross-border trading which will improve the ease of doing business. This will help Kenya create employment and upscale manufacturing of high quality goods at competitive pricing.

We need to be competitive, and it is also important to work with the East African Community and other trade regimes in eliminating tariffs and non-tariff barriers. Cross border delays are another focus area with more strategic development of regional infrastructure.

Contrastingly, Kenya performs well in handling export shipments.

Eliminating tariffs can help African countries boost economic growth, transform their economies and achieve the SDGs. However, a bigger focus should be on growing our Small and Medium Enterprises sector and long-term public-private driven strategic plans to support our youth entrepreneurs.

Further, President Uhuru Kenyatta’s focus on the Big 4 Agenda will need a lot of private/public partnerships.

Nonetheless, across the continent some of the obstacles to integration include fears of significant tariff revenue losses and an uneven distribution of costs and benefits.

But with a population market of over one billion people Africa is ripe to be a vibrant trading continent. In the long-run, trade liberalisation lowers costs and allows consumers to access a greater variety of products at lower prices.

As the rest of the world tinkers with breakthrough solutions that will push humanity into a new phase of innovation and technological advancement Africa, too, should join in.

The continent is brimming with business opportunities and we should strongly believe in “Buy Africa build Africa products and services.” The choice is yours!

Mr Diaz is a Trustee at Brand Africa and Director of East Africa Business Council.