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By Baboloki Semele
The Economic Commission for Africa (ECA), along with its partners, Google and Africa 24 successfully held the annual flagship initiative, the Africa Business Forum, on Monday 7th of February on the margins of the African Union summit in Addis Ababa via a hybrid format. Bringing together heads of state with CEOs and other stakeholders, the focus of the Forum this year was transport – a sector that is critical to maximising the benefits of the African Continental Free Trade Area (AfCFTA).
During her presentation, the United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa Dr. Vera Songwe highlighted that if Africa is to maximize growth and move forward, much attention and focus should be given to the service sector, as increasing the service sector on the continent contributes over 50% of growth.
Dr. Songwe indicated that the ECA’s study showed that reaping the full benefits of the AfCFTA requires integrated planning of trade and transport. And it demonstrates tremendous investment opportunities in the transport sector.
She says a new study by the ECA found that:
-Implementation of the Free Trade Area would lead to an increase in demand for intra-African freight of around 28% by 2030, compared to a scenario without its implementation.
-The share of rail services out of all modes of transport is expected to increase from 0.3% to 7%; thus representing a 20-fold increase in percentage terms.
-Africa would require close to 2 million additional trucks, over 100,000 rail wagons, 250 aircraft, and more than 100 vessels by 2030, if the Free Trade Area is fully implemented; and.
-Aircraft demand to support trade flows within West Africa will increase by 13.2% by 2030. Trade between North and West Africa would increase demand for aircraft by 12.9% while demand within Southern Africa will increase by 12.2%.
She highlighted that the transport sector will strongly benefit from AfCFTA, and this benefit will be optimized if AfCFTA is accompanied by the implementation of regional infrastructure projects. The estimated cost of trucks required as a result of AfCFTA is US$ 345 billion. The estimated cost of aircraft required as a result of AfCFTA is US$ 25 billion. The estimated cost of rail wagons required as a result of AfCFTA is US$36 billion whereas the estimated cost of vessels required as a result of AfCFTA is US$ 4 billion. AfCFTA came into force in 2019, to increase intra-African trade by eliminating import duties. Such trade would double if non-tariff barriers were also reduced.
For his part the president of Botswana, Dr. Mokgweetsi Keabetswe Masisi said Botswana’s central location in SADC presents multiple opportunities for investors seeking to tap into the air transport and tourism sectors regionally. Dr. Masisi said despite its relatively limited market size and landlocked position, Botswana aspired to become a regional logistics and tourism hub.
The country, he says, also has the capacity to serve as a satellite hub complementing other regional hubs and service niche sectors as well as under-serviced routes, thus expanding its air freight and air passenger volumes into Africa as a whole.
President Masisi says the country’s air infrastructure is International Civil Aviation Organisation compliant, less congested, and offers a more competitive fee structure. In addition, he says Botswana’s innovative intra-regional corridor developments and interconnectivity of road, rail, and air cargo provided a model platform for accessing local, regional, and international markets.
Above all, the President says, Botswana is one of the most business-friendly and stable countries in the region with a conducive and welcoming operating environment for investors. He told the delegates that Botswana also offers duty-free importation of machinery and equipment for manufacturing purposes and customs duty exemption on raw materials for goods going outside the Southern African Customs Union area.
He informed his audience that the National Tourism Policy was recently revised with the aim of leveraging existing resources to enhance citizen economic participation in lucrative tourism sites in the Okavango Delta and elsewhere in the country. The policy also promotes domestic travel and intra-Africa travel through the implementation of key supporting projects, ongoing infrastructure upgrades, alignment to Africa Agenda 2063, and the implementation of the Africa Continental Free Trade Agreement (AfCFTA) to which Botswana is a signatory.
He says the country has embarked on a number of national projects to upgrade air transport infrastructure to a multimodal level with a view to enabling the air transport and tourism sectors to leverage on AfCFTA and Agenda 2063 provisions and aspirations. Among the projects, Dr. Masisi mentioned total upgrades and expansion of the Gaborone, Francistown, Maun, and Kasane international airports as well as Kazungula, Mohembo, and Plaatjan bridges development.
Others include liberalisation of air transportation and tourism sectors to allow for private sector participation such as private air charter services which has attracted a lot of interest from both local and foreign investors. ‘Investing in Multimodal Transport Infrastructure to Optimize the Benefits of the African Continental Free Trade Area: A Focus on Air Transport and Tourism’ is the theme for this year’s forum.
For her part, the Commissioner for Infrastructure and Energy, Dr. Amani Aboud-Zein noted that the Continental Free Trade Area (AfCFTA) which started its operations on 1st January 2021 is another important flagship project under AU Agenda 2063 which should be supported by an efficient transport infrastructure network, a liberalized air transport market, the protocol on the free movement of persons, goods, and services as well as the African passport initiative.
She congratulated Dr. Vera Songwe, Executive Secretary of UNECA, and her team for the excellent organization of the annual business forum and for selecting this important theme on the implication of the African Continental Free Trade Area (AfCFTA) to demand in transport infrastructure and services with particular focus to air transport and tourism.
She highlighted that the African Union vision for the air transport sector is anchored under the Yamoussoukro Decision (YD) on the full liberalization of air transport in Africa and the removal of non-physical barriers to the movement of persons, goods and services. Launched during the 30th Summit of Heads of States on 29th January 2018, the Single Africa Air transport market is among the 12 flagship projects of the African Union (AU) Agenda 2063.
Its main objective is to create one single air transport market in Africa, liberalize air transport services and drive economic integration. As a flagship project of AU Agenda 2063, Dr. Aboud-Zein noted that the SAATM strongly supports the Continental Free Trade Agreement and the Free Movement of Persons.
Now quick facts on reality on the ground in Africa:
-Road mode, accounts for 77% and more of business operations in Africa, in terms of movements of goods and services from one market to another. And as for the movement of people from country to country and within country, road accounts for 90% of how people move across the African continent.
-Shipping, which accounts for how African minerals and products are ferried to the intentional market stands at 62%.
-Air travel accounts for 28% of how cargo that moves in and of Africa is ferried.
-Rail; even though Africa has a hundred thousand kilometres of rail, railway line accounts for only 1% of how goods are ferried from one market to another in Africa.
Perhaps, looking at the above statistics, one would see, a handful of opportunities available for Africa to fix and modernize transportation infrastructure to par it with international standards to expedite continental free trade area towards the attainment of infra-African trade.
The theme for the 5th Africa Business Forum was investing in multi-model transport infrastructure and optimize the benefits of the African continental free trade area