New study shows AfCFTA would increase intra-African freight

Trading under the African Continental Free Trade Area (AfCFTA) begun January 1, 2021. With a market of 1.2 billion people and a combined Gross Domestic Product of $2.5 trillion it is expected to lead to a new era of development in Africa.

A new study released last week shows that the AfCFTA would lead to a general increase in demand for intra-African freight of around 28 per cent.

The study by the Economic Commission for Africa (ECA) says in 2019, intra-African demand for freight transport was heavily skewed in favour of road transport (76.7 per cent), with the share for rail transport being close to zero (0.3 per cent). Policies to expand rail networks combined with AfCFTA implementation policies are expected to change this distribution, it indicated.

According to the study in a scenario where AfCFTA is implemented and planned infrastructure and services are realized, the share of demand for rail transport would increase from 0.3 to 6.8 per cent.

“In contrast, the share for road transport would decrease from 76.7 to 69.7 per cent. The share for maritime transport would increase with implementation and decrease without implementation,” it said.

It however stated that, the share for air transport would remain almost unchanged.

“However, the number of tonnes transported by aircraft with AfCFTA implementation would nearly double, from 2.3 to 4.5 million tonnes,” it said.

The study which investigated whether implementation would lead to a concentration of trade flows in specific countries, and whether that would be associated with decisions by those countries to become logistics hubs, found that countries such as Côte d’Ivoire, Ghana, Kenya, Mozambique, Nigeria, Rwanda, South Africa, Uganda, the United Republic of Tanzania and Zambia have invested in logistics and industrial parks that serve as logistics hubs.

It was determined that not all those countries would have a higher concentration of exports in the AfCFTA implementation scenario, the study found.

The study also found that Senegal, Ghana, Morocco and Nigeria would each experience an absolute increase close to or greater than 1 per cent in their total intra-African export trade.

Citing a 2018 World Bank Logistics Performance Index, the study noted that although Ghana, Morocco and Nigeria are not the best logistics performers on the continent, they do perform above the African average. Whereas Senegal is the country among the four with the lowest performance in terms of logistics. To improve its performance, the national trade strategy of Senegal should prioritize the development of intra-African trade and logistics, it said.

By Emmanuel K. Dogbevi
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