Mukhisa Kituyi: Growing Intra-African Trade Flows

What Africa sells to Africa has significantly more value than what the continent sells to the wider world – mostly commodities whose prices are determined on distant shores and cannot be controlled by the producers.

Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) strongly believes that the key to Africa’s future is to be found in intra-regional trade. Putting theory into practice, Kituyi has been closely involved in setting up the African Continental Free Trade Agreement (AfCFTA) which is to encompass all member states of the African Union (AU). It will also remove all tariffs on about 90% of goods and services, potentially becoming the world’s largest free-trade area.

AfCFTA will automatically come into force when at least 22 of the 55 participating states ratify the deal hammered out and signed by the heads of state during a special meeting earlier this year in Kigali, Rwanda. Thus far seven countries – Kenya, Swaziland, Niger, Guinea, Rwanda, Chad, and Ghana – have already ratified the agreement. AU Commissioner of Trade and Industry Albert Muchanga is confident that by the middle of next year at least 15 more countries will have completed the ratification procedure, allowing AfCFTA to be launched. Meanwhile, the Tripartite Free Trade Area is nearing completion. This Cape-to-Cairo initiative aims to establish a single market comprised of three currently separate free-trade areas: the Common Market for East and Southern Africa (COMESA), the Southern African Development Community (SADC), and the East African Community (EAC).

For Kituyi the implementation of these overlapping free-trade areas cannot come soon enough. “For Africa, a clear determination to expand trade among ourselves is an important step,” he says. “Uncertainties in international trade increase the premium on regional intra-African trade.” The UNCTAD secretary-general also notes that stronger trade flows will inevitably lead to improved competitiveness which could later be unleashed. Kituyi warns, however, against the imposition of non-tariffs barriers by governments eager to protect their home turf. “When there is a deficit of political goodwill, excuses are made to slow-down trade. That absence of goodwill leads to the use of too many non-tariff measures,” said Kituyi.

The UNCTAD secretary-general is particularly concerned for small traders, who are often at the mercy of petty officials trying to extract some “fine” or “tariff” invented on-the-spot. They are also frequently arrested for violating some obscure, non-existent, or randomly enforced rule. According to a study by the East African Sub-regional Support Initiative for the Advancement of Women (EASSI), traders face a bewildering array of obstacles, including lack of capital, information, fierce competition, and high taxes. But EASSI researchers found that the apparent disconnect between border officials and the laws and regulations they are meant to enforce poses the greatest obstacle to cross-border trade.

Kituyi is aware of the problem and expects the free-trade initiatives currently being deployed to smooth the path for large and small traders. There is much to gain for all concerned. A study by the United Nations Economic Commission for Africa predicts that, once AfCFTA comes into being, continental cross-border trade will increase by at least 50% over a four-year period.

Africa is moving towards free trade, and the rest of the world seems to be drifting in the opposite direction. This is a development that causes Kituyi concern. He detected a “crisis in multilateralism” that has taken intergovernmental entities such as the World Trade Organisation (WTO) by surprise. Kituyi worries about the impact of the imminent departure of the UK from the European Union on world trade flows. The tit-for-tat trade wars between the US and its principal partners in Asia and Europe have also changed the immediate economic outlook. Kituyi fears the tide may be turning with a revival of protectionism and a reversal of capital flows from developing nations. It is one of the many reasons why the UNCTAD secretary-general is passionate about fostering and growing intra-regional trade: it allows Africans to take the continent’s destiny in their hands and pursue sustainable, home-grown solutions for growth, independent of tectonic shifts occurring elsewhere.