In March 2018, 44 African leaders met in Kigali to sign the African Continental Free Trade Area. The objective is to eventually establish the Continental Free Trade Area (CFTA). This will be the world’s largest free trade area by number of countries involved. This is expected to open the continent within itself. It will facilitate movement of goods, services and people within the continent. This is long overdue as research has shown that regional trade is one of the most important for economic growth. Previously, most countries in the continent have ran after international markets, mostly in western markets. This could have been in line with prior agreements in the movement of raw materials or commodities.
The intra-Africa trade will bring with it new challenges as marketers develop new markets; businesses navigate new territories and expand their groups of stakeholders within the continent. It will provide opportunities for local and regional businesses. A stakeholder refers to any group of individual who can affect or be affected by the activities of an organisation in trying to achieve its purpose (R.E Freeman, 1984). Hence, as businesses within the continent exploit the upcoming CFTA, which eases movement, they will come across new groups of people, markets with their unique demands and expectations. The treaty will help in reducing barriers. However, any researcher will tell you, getting to market is only one dimension of the overall success factors. Understanding and meeting the success factors of any given market within the continent will call for a customised approach.
Most multinational companies have long known that every market requires marketing strategies tailored to that market. However, there are still lapses either due to budgetary or time constraints. Meeting and managing the different stakeholders in each market continues to be a challenge. We would therefore expect regional and local businesses to face the same challenges as they try to take advantage of this treaty. The previous wider view of ‘Africa market’ has led to one-fit all solution for the continent. The international markets have long held this view given the continent has contributed not more than 3% of the global trade.
Businesses and researchers within the continent now have a chance to develop local and continent-wide benchmarks. This is important given the fact opening of boundaries for trade and movement of people does not imply acceptance within the new markets. Cultural and religious factors, varied consumption and usage patterns, habits …etc varies across markets within the continent. Hence, a review would include a top-down (from continental level to a market/sector level) and vice versa (bottom-up).
Benchmarking various aspects – be it customer experiences, products or staff issues have remained a challenge. Most markets have operated in silos given the independence and regulatory framework within each country. The CFTA provides an opportunity for researchers to help businesses develop measures that will help uplift the standard of products and services across the continent. Aspects that previously one mentioned of one country compared to the other in passing may now be integral part of the business. Consumers will experience more African ‘taste’ than ever before. It might no longer be an issue of talking about Sadza, Pap, Nshima, Fufu or Ugali in isolation (An almost similar dish made from maize flour, present in different countries in the continent).
The same will apply to people. Businesses will move their people across markets within the continent. Staff movement from one market to the other could be easier as the treaty comes into force. However, experience has shown working in one market and moving to another country has its own challenges. This implies staff performance measures could be adjusted by markets but with benchmarks that reflect a continental view.
The free trade agreement opens up markets to over 1.2 billion people. If the agreement enables free trade as envisaged in its work structure, the addressable market will increase significantly. When one thinks of a billion consumer market, China and India come in mind. However, these are nation states. Africa still has the boundaries in place, and this may impede the gains from enormous opportunities that CFTA offers. The internal laws and regulations will be in force even as businesses move across the continent. It will remain a challenge and a risk. Nations can always crawl back to their ‘sovereignty’. For instance, labour laws. Hence, moving staff from one market to another will be easier, but they will still have to adhere to the labour laws of the host country. Past experiences within the East Africa community, which is one of the successful free trade areas, attest to this issue. This implies any measures have to overcome one tier – country-specific measures.
Developing comparable performance measures and benchmarks across the continent has remained a challenge over time. Will the free trade area provide an opportunity to solve the issue? Only time will tell. On paper, it may sound an appealing approach, but once in place, the rollout will determine the success of the agreement.
A key starting point could include the current multi-country players, who have operations across the continent. Can the current measures be enhanced to enable better comparisons across the continent? Which aspects can one use for a fair comparison given the diversity within the continent?
Also, while some markets across the continent have developed some benchmarks for various aspects among their stakeholders, others are yet to do so. Having regional benchmarks or market grouping could fill in the gaps between country level and continental level – i.e. bridging the gaps in the top-down and bottom-up approaches. All in all, researchers have a role in contributing to the success of the Africa Continental Free Trade Area, in whichever sector one operates.
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Fantastic stuff!