It’s Finally Here! AfCFTA – The New Dawn of The African Market
30th May 2019 marked the new dawn. On this day, the African Continental Free Trade Area (AfCFTA) agreement entered into force. The required number of ratifications had already been deposited. This made the agreement a binding international legal instrument. Twenty two (22) was the minimum required for ratification. By the time of filing this price, the number had gone up to 24 countries. Why is this important? This has the potential to create the largest free trade area in the world. As highlighted in some of my past articles, removing barriers to trade – movement of people, goods and services, is a key catalyst for unlocking Africa’s potential. This agreement is a key instrument to unlocking this new era. It is time for people across the continent to look around their neighbourhood countries and around the continent for new markets.
For a long time, market players in Africa tended to seek exports and new markets in Europe, Americas, Middle East and Asia – and little within Africa continent. Intra-Africa trade has been dismally low, yet statistics and trends show this is best way to spur growth. For instance, Uganda is Kenya’s largest export market. This is not only important for trade, but also comes with other advantages – e.g. the cost and time required to move goods is shorter. To facilitate these movements, infrastructure developments will take place. Such developments have significant multiplier effects to the local and regional economies. This will spur developments such as trans-Africa highways, which were mooted years ago. This will also include the development of Africa air transport among other areas. The visa-free travel for passport holders from the continent could be realised earlier than expected. Telecom and finance services will also grow enormously. In other words, the agreement opens up many sectors within any economy of a country that has ratified it.
The services sector will most likely experience higher and faster growth before the manufacturing and goods get to the fold. This will arise from the versatile nature of the services sector, but also due to low manufacturing base within the continent. There are obvious areas that need to tighten the framework on goods especially on sourcing, components, among other areas to avoid manufacturers from non-Africa countries from taking advantage of the agreement at the expense of the local entities.
Marketers now have an opportunity to make an impact in developing not only local but also regional markets. With easier access to these markets, marketers have an opportunity to pursue better consumer understanding, develop regional trends and deepen market understanding at a wider level.
However, most important is the deepening in getting to nuances within the market. It is time to get an understanding of previously uncovered details on Africa market. Ease of access to these markets does not imply instant uptake of goods and services in the new markets. There will still be the need to unearthing the factors that will make goods and services move from one market to another. In other words, understanding consumer and business behaviours in different markets will still be a key factor to driving growth. While the policy and regulatory factors will no longer be a key hindrance, the need for go-to-market strategies will now be a priority in developing these new markets.
Understanding habits and patterns in new markets will be key areas to enable businesses take advantage of this agreement. Hence, marketers across Africa now have key role to taking this agreement to a new level of success. Access to markets will no longer be key hindrance, but understanding these markets will be the next level in ensuring the success of the new environment.
Important but an indirect effect is the sustaining of peace within the continent. Once countries start deriving the benefits from the agreement, sustaining peace will then be a key priority. Countries would be looking out for each other. It is therefore time for Africa. The narrative of intra-Africa trade is about to change. Marketing in Africa is also about to take a new level of development.