Reduction of non-tariff barriers (including border and customs administration) could lead to trade gains in Africa of $20 billion a year, compared to the $3.6 billion that could be achieved by the elimination of tariffs alone.
New report launched yesterday by the World Economic Forum (WEF) at the Annual Meeting in Davos, Switzerland, calls for public-private partnerships to drive more integrated digital reforms
The report said inefficient border and customs processes in Africa remain a significant concern and may result in some countries being unable to realize the full benefits of the Africa Continental Free Trade Area (AfCFTA).
The digital transformation of customs and borders in Africa could improve efficiencies in processes, such as administration at customs and borders, the Growing Intra-Africa Trade through Digital Transformation of Customs and Borders, report said.
The report also provides a pragmatic perspective on the non-tariff barriers in border and customs services that can be exponentially improved through digital transformation to increase intra-Africa trade.
The report, written in collaboration with Deloitte, was launched at the convening of the Forum Friends of the AfCFTA, a multi-stakeholder group that supports implementation of the goals set out by AfCFTA through public-private collaborations.
The group comprises President of Rwanda, Paul Kagame; Secretary-General, AfCFTA Secretariat, Wamkele Mene; Founder/Executive Chairman, African Rainbow Minerals, Patrice Motsepe; and Chairman, Zenith Bank, Jim Ovia, and a host of others.
Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.
AfCFTA potential
The AfCFTA implementation, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty.
However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.
Africa Lead, Enterprise Technology and Performance at Deloitte Africa, Kavitha Prag, said: “The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realization hinges on the introduction of efficiencies, including the improvement of customs processes.
“Digital transformation of border posts and customs is thus a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries.”
Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.
The report highlights insights from the Logistic Performance Index as well as key insights from case studies demonstrating the quantifiable value of digital reforms in countries such as Ghana, Kenya and Uganda.
The paper is a call to action for more integrated digital reforms that can drive higher impact through public-private partnerships that sets the course for Africa’s post-pandemic recovery and growth.
“Even after tariffs are lowered, and simplified procedures put in place, the full benefits of the AfCFTA will not be realized unless non-tariff barriers to trade are also addressed,” said Chido Munyati, Head of Africa at the WEF. “Policy-makers can make a difference by implementing digital solutions.”
The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just three per cent of global trade.
Policy support
The report also urges the following policy support to enable digital transformation:
- Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo
- Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes
- Take action based on demand-driven interventions that lead to higher adoption of rates by all organizations and position intra-Africa trade as more cost- and time-competitive
- Develop skills of services agents that can maximize the potential of the digital solutions
- Better coordination among AfCFTA members to establish Single Customs Territories
The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just three per cent of global trade.
The bank says boosting intra-regional trade requires improvement of physical integration, such as cross-border energy, transport and connectivity infrastructure, strengthening cooperation by harmonizing customs rules and procedures, and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.
