The first shipment of products from South Africa to other African Continental Free Trade Area (AfCFTA) countries has embarked from the eThekwini port.
President Cyril Ramaphosa hailed it as the start of preferential trade by South Africa under the AfCFTA.
“African countries trade with the rest of the world but we have limited trade among ourselves,” he remarks. “We need to change this.”
African trade ministers have finalised rules of origin of what constitutes an African product for about 92% of the products that African nations trade with each other, he adds.
“The products that we trade among ourselves must truly be ‘Made in Africa’,” Ramaphosa says, adding that the modalities for trade in goods has moved faster than for services.
:We therefore need to put more effort into building African champions in finance, retail and telecommunications, and in expanding tourism between African countries.
“That is the only way in which our economies will grow faster and sustainably.”
He points out that the AfCFTA creates the world’s largest free trade area by number of countries, and has the potential to bring transformative change and tremendous opportunities to African economies and businesses.
Implementation of the AfCFTA will accelerate the development of regional and local value chains, offering investors access to a population of 1,7-billion people with a fast-growing continental GDP.
“Industrial development is core to Africa’s integration,” Ramaphosa says. “It builds Africa’s productive capacities, adds greater value to our products and diversifies trade beyond the traditional commodities.”
He points out that the automotive industry is a good example of inter-African trade: leather car seats come form Lesotho, wiring harnesses from Botswana, copper from Zambia, rubber from Cote d’Ivoire, Nigeria, Malawi, Ghana and Cameroon, and steering wheel components from Tunisia. These are installed in cars that are then exported from South Africa to other parts of the world.
“These inputs alone accounted for more than $200-million worth of products traded among African countries – and the scope to do more is available to us.”
Ramaposa points out that the levels of intra-African trade have been growing in recent years, but remain small by global standards.
“Intra-Africa exports are reported to stand at around 16% of Africa’s total exports, compared to 55% in Asia, 49% in North America and 63% in the European Union.
“For South Africa, as with many other African countries, the start of preferential trade will create great opportunities for growth and development.”