The African Free Trade Agreement came into effect on Sunday, signalling the start of a new age of intra-African trade. The new agreement will create a single market of goods and services for the 1.2 billion people on the continent and, according to the United Nations, boost trade by 52.3%.
With AfCFTA facilitating the movement of goods across Africa, from agricultural produce and medical supplies to manufactured goods, it will lead to healthy competition among key players, increase innovation and boost economic growth. It will also create opportunities for new and smaller players to explore what the market may have to offer them.
To ensure trade is seamless, certain infrastructure needs to be in place, however. This is why transportation is one of the key priorities of the AfCFTA. At the moment, the $150 billion Africa logistics industry still mostly relies on telephones, opaque pricing and full of expensive middlemen.
Addressing the challenges
It goes without saying that Africa has its challenges, especially when it comes to transportation and logistics. A lot of the infrastructure we have in place is underdeveloped and thus inhibitive. The cost of moving goods across Africa can also be as much as three times higher compared with the rest of the world. Rail and road connections to key economic hubs remain sketchy, which makes it difficult to move goods from producers to consumers. Those that are able to move these goods do so at significant costs, which means consumers end up paying more. There are also issues with safety of goods to the ability for them to be delivered on time.
Moving goods from land-locked countries is even more difficult and expensive. For example, it can take up to 30 days to transport goods from Djibouti to Ethiopia (a journey of less than 700 kilometres). In Burundi, it takes up to 71 days to import goods from other East African countries. All of these challenges lead to loss of revenue for both business owners and logistics companies across the continent and can be a hindrance to exploring new opportunities in the first place.
Exploring the solutions
But with any problem comes a solution. As with many aspects of life today, technology is playing a major part in finding solutions to many of the roadblocks that hinder efficient movement of goods across the continent.
From location-based technologies to temperature-controlled storage, we are taking advantage of emerging and established technologies to provide the needed visibility, transparency and reassurance that will put businesses’ minds at rest. Our proprietary technology connects cargo owners and recipients across Nigeria, Togo, Ghana and Kenya, and we have plans to further expand across Africa before the year is out.
Retailers and manufacturers looking to expand their operations rely on highly efficient distribution networks and supply chains. That’s why we offer a range of cost-effective solutions to overcome trade challenges by bringing accountability and order to the logistics and supply chain.
The expansion of trade across Africa also presents new employment opportunities as more drivers will be needed to transport goods across the continent. It also means new revenue streams for existing drivers. At the moment, our drivers can earn up to $5,000 per month (along with training and group programs on insurance, discounted petrol and vehicle financing) which allows them to secure their financial futures.
Ultimately, the AfCFTA agreement will serve as an opportunity to develop the modern infrastructure required to drive Africa’s trade into the future. In the long run, the value logistics companies bring to intra-African trade will also lead to the continent contributing greatly to cross-border value-chains. If ever there was a time to shake things up in the African logistics industry, now is the time and we are excited to be leading this movement.