While the AfCFTA aims at creating a single market for goods and services, and promoting its free movement so as to increase intra-Africa trade and deepen African economic integration, it remains unattainable without the provision of adequate infrastructural facilities to the support these objectives. Undoubtedly, the importance of infrastructure to any cross-border trade, including the AfCFTA, cannot be overemphasized, especially with the key roles being played by different infrastructural facilities along the various stages of trade. There is thus no gainsaying that infrastructure is another key area to be massively impacted by the AfCFTA.
Some of the infrastructure that will be potentially impacted the most by the AfCFTA for its success includes; Transportation Infrastructures (including Roads, Railway, Water, Air and Pipeline), Storage Infrastructures (including warehouses), Technology Infrastructure (including Information Technology and Telecommunication facilities), Power Infrastructures (including electricity supply) and Processing/ Manufacturing Infrastructures (including plants and oil refinery).
- Transportation Infrastructure: the availability of adequate transportation facilities remains one of the biggest potential facilitators of the success of the AfCFTA. Since the ultimate objective of the AfCFTA agreement is to create a single market for Africa and promote the free movement of goods and services within Africa, there is the unavoidable need to not only eradicate the tariff and other non-tariff barriers of trade, but also ensure that the conducive, convenient and smooth means and mediums, of moving or transporting goods and services from one location where it is in surplus supply to other locations where it is in surplus demand across Africa, are provided.
The current situation of the roads, water, railway, aviation and even pipeline (for transporting oil and gas) facilities, especially those connecting two or more AfCFTA member-states together, need to be urgently improved to be able to support the increased movement of goods and services that is expected to come along with the AfCFTA in the near future. Thus, transportation infrastructures such as good roads, efficient seaports, airports and railway system, and effective pipeline system remain key areas to be impacted by the AfCFTA.
- Storage Infrastructure: apart from transportation, storage facilities are another important infrastructures needed for the success of the AfCFTA and it is expected that in the coming years, storage infrastructures will witness a massive impact of the AfCFTA. Examples of storage infrastructures include warehouses, etc.
Agriculture has been identified as a major sector of the African economy to be greatly impacted by the AfCFTA, being the highest provider of employment for over 60% of Africa’s working population and by far the single most important economic activity on the continent. The implication of this is that, there is expected to be an exponential increase in agricultural production over the next few years of the implementation of the AfCFTA, resulting into an increase in the need for storage facilities to cater for the increased produce. Without proper storage infrastructures for the increase produce, the aim of the AfCFTA with respect to agriculture cannot be fulfilled as many of the produce would eventually be put waste if not properly stored.
Apart from storage infrastructures for agricultural produce, every other key sectors where production is involved, whether production of raw materials or finished goods, will also require the use of storage facilities before the goods are being transported from the supply zone to the demand zone e.g. crude oil and petroleum products, foods and beverages, clothing, raw materials, even services.
- Technology Infrastructure: this is another important area of infrastructure to be impacted by the AfCFTA. E-Commerce and the digital economy are core-integral part of intra-African trade facilitated by the AfCFTA, and at the heart of both lies technology infrastructure and facilities which powers both. Also included under technology infrastructure is the telecommunications infrastructure and the internet which are very useful infrastructures in transferring data and information in accordance with the movement of goods as services during trade. As goods and services move from one location to another during trade, so must data and information be moved with the goods and services.
There is a need for the improvement of technology infrastructure so as to ensure that the available technology in Africa can adequately support the intra-Africa trade of AfCFTA, and there is no communication, data or information gap in the free flow and movement of goods and services in the AfCFTA.
- Power Infrastructure: it cannot be overemphasized that electricity supply plays a crucial role in the success of the AfCFTA. For many businesses which rely on the supply of electricity for their functioning, there is a need for stable electricity supply so that these business can increase their productivity and be able to effectively participate and compete in the AfCFTA.
While unstable electricity supply, despite the high electricity tariff rates, remains a problem in many African countries that are part of the AfCFTA (including Nigeria), it is estimated that businesses in Nigeria lose about $29 billion annually to poor electricity (almost 8% of the country’s $400 billion GDP for 2020). An alarming figure! As such, there is the need for the improvement of electricity supply for the success of the AfCFTA and it is expected that the AfCFTA will impact positively on power infrastructure across Africa in the coming years.
In conclusion, while the AfCFTA seeks to promote intra-Africa trade through the elimination of tariffs and other non-tariff barriers to trade, it is also very important that key infrastructures that are relevant and important to promoting intra-Africa trade are also adequately catered for as these infrastructures can go a long way in facilitating the effectiveness and success of the AfCFTA.
To learn more about the AfCFTA and it’s benefits, kindly subscribe to our bi-monthly newsletter