Made in Africa: Historic Moment for Economic Integration

Made in Africa:

Historic Moment for Economic Integration 

by PD Lawton   4 February 2024

“South African automotive companies source leather car seats from a factory in Lesotho employing close to a thousand workers and wiring harnesses from Botswana at two plants employing several thousand workers. They source copper wire from Zambia, rubber from Cote d’Ivoire, Nigeria, Malawi, Ghana and Cameroon, and steering wheel components from Tunisia.”

President Cyril Ramaphosa officiated the launch of South Africa’s first shipment under the preferential trading agreement of the African Continental Free Trade Area (AfCFTA) on 31 January 2024 at the Port of Durban, Kwa Zulu Natal. The shipment to Ghana includes refrigerators [1] home appliances and mining equipment.

This is an historic event for the entire continent as it marks the practical realization of the AfCFTA Agreement which was inaugurated on the 1 January 2021.

AfCFTA is expected to increase the size of Africa’s economy to $29 trillion by 2050.

The concept of AfCFTA is to increase trade within the 55 African states, to manufacture and grow what is needed on the continent, to export processed goods, agricultural and industrial, using African resources and made by African labour. This is very obviously the catalyst needed to drive industrialization of all African economies and create the productive employment needed to put the continent in its rightful place on the world stage. The full implementation of the AfCFTA will lead to increased investment and productive capacity. It will lead to greater economic integration and greater unity.

Primary to the AfCFTA Agreement is the harmonization of trading standards which regulates product quality. AfCFTA simplifies and reduces export/import duties which enhances ease of trade. AfCFTA ensures a lower tariff regime. Over time many of the tariffs will be removed for goods and services. The aim is to make Made in Africa products available to the African market at very competitive prices relative to imports from Asia.

At the Durban launch President Ramaphosa gave an excellent speech in which he said that the days of Africa being the raw materials market for the global North were over. It is time for the world to meet Made in Africa.

Today, we are witness to a historic moment in Africa’s economic destiny. Today, we mark the start of preferential trade by South Africa under the African Continental Free Trade Area. In a short while, we will be witnessing the sending off of the first shipment of products from South Africa to other AfCFTA countries.

This shipment demonstrates that the African Continental Free Trade Area is a reality. We are in the port city of eThekwini taking forward the dream of an ever larger and ever stronger Africa. African countries trade with the rest of the world but we have limited trade among ourselves.

The reason for this is clear: we are principally exporters of raw materials, selling rocks and black liquid to the world, instead of harnessing our oil and the minerals to industrialise our continent. We need to change this.

Over the last few years, our trade ministers have been finalising rules of origin of what constitutes an African product. They have done well to finalise 92 percent of the products that nations trade with each other. I am happy to see so many of Africa’s trade ministers here today, able to celebrate the work to which they have contributed. We need them to be even bolder in further rules of origin.

The products that we trade among ourselves must truly be ‘Made in Africa’.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. The African Continental Free Trade Area 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.

The implementation of the African Continental Free Trade Area 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. It builds Africa’s productive capacities, adds greater value to our products and diversifies trade beyond the traditional commodities. We have already seen the potential of greater cross-border collaboration.

Let me give the example of a value-chain that is developing in the auto industry.

South African automotive companies source leather car seats from a factory in Lesotho employing close to a thousand workers and wiring harnesses from Botswana at two plants employing several thousand workers. They source copper wire 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.

But it requires bold rules of origin. For every one percent of extra African content, there is an opportunity for a factory or mine based on the continent to supply the products.

And as the world moves to green industrialisation, Africa is well positioned to use our critical minerals to leverage industrialisation on the continent.

The opportunities are vast: in food and beverages, in cars and trucks, in clothing and textiles. We have the capacity to produce more of our own pharmaceutical products and medical equipment.

Investment can flow to the production of chemicals, machinery and equipment, household goods and many, many more. On the side of our proceedings here at the quayside, we have assembled a few products that illustrate what will be exported today and in the weeks ahead. 

Beyond the industrialisation of which I have spoken, this continental market can help us promote agricultural development and food security.

Through our work, we can ensure that young people and women-owned firms are active in export markets.

The Protocol on Women and Youth in Trade will help ensure that the African Continental Free Trade Area contributes to inclusive growth and development. We have a unique opportunity to lift millions of people out of poverty by empowering women and young people to change the continent’s business environment.

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 percent of Africa’s total exports, compared to 55 percent in Asia, 49 percent in North America and 63 percent 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. Not only will it benefit our country’s producers, but it will also see a huge increase in traffic through our ports, our airports and our land-based border posts.

The products made in Gauteng, Limpopo, North West, Free State, Mpumalanga and the Northern Cape will flow through these ports to markets beyond our borders. That is why, as the South African government, we are focused on implementing our Freight Logistics Roadmap to improve the efficiency and competitiveness of the country’s rail lines and ports. We are working closely with industry to fix Transnet’s rail and port operations in the immediate term and to ensure greater investment in this infrastructure into the future. As I conclude, allow me to thank the Secretary General of the AfCFTA Secretariat and his team for facilitating and guiding the AfCFTA negotiations.

I thank the AfCFTA Council of Ministers and Minister Ebrahim Patel and his team, for their hard work negotiating the AfCFTA Agreement and its Protocols. This has made it possible for us to witness the start of preferential trading.

Last but not least, I wish to express my appreciation to the exporters who have embraced this opportunity and have worked with us to be part of the first shipment of products under the African Continental Free Trade Area.

From this quayside, and from ports, airports and border posts across the continent, a new era of growth and prosperity is being born. A great future awaits our continent and its people.

I thank you.”

Source of quoted speech:

footnote [1] please review a previous africanagenda article `Chilling News for Obama: Africans are making fridges`

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