Namibian companies consider AfCFTA boon
Though it is early days yet, companies are taking cognisance of the opportunities a new continental trade regime might bring.
19 November 2019 | Africa
Namibia recently signed the African Continental Free Trade Agreement (AfCFTA) that could potentially unlock the massive African market of 1.2 billion people as the agreement will progressively eliminate tariffs on intra-Africa trade.
It has the potential to increase intra-continental trade by 52.3% by eliminating import duties, and double this trade if non-trade barriers, especially the Technical Barriers to Trade (TBTS), are also reduced.
In concrete terms, the AfCFTA means the removal of burdensome customs procedures and excessive paperwork, cooperation between customs authorities over product standards and regulations, as well as transit and facilitation, to ease the flow of goods – and services –between African countries.
It also provides for a more conducive environment for recognising African intellectual property rights, facilitating intra-African investment, and addressing anti-competitive challenges, the African Union (AU) has stated.
The timeframe for implementing the removal of border tariffs or trade barriers is yet to be confirmed.
“The AfCFTA is poised to contribute significantly to increased competitiveness of Africa’s industrial products through harnessing the economies of scale of a large continental market,” says the logistics hub project manager at the Walvis Bay Corridor Group (WBCG), Clive Smith.
He says this can increase the rate of diversification and transformation of Africa’s economy and improve integration of the continent into the global economy.
“Consequently, Namibia will be able to tap into value-addition activities, which allows us the opportunity to grow our manufacturing industry and build a stronger and skilled workforce. This therefore will lead to our current transport corridors transforming our economic corridors, which benefits all the communities along the way,” Smith says.
The Port of Walvis Bay can greatly benefit from the AfCFTA, Smith believes.
“Over 80% of world trade is carried by sea, and effectiveness of the ports is determined by connectivity to markets. This naturally translates to an increase in transit cargo on our [transport] corridors, as our port is recognised as Africa’s most efficient port,” Smith says.
Local manufacturers are still cautiously gauging the promised opportunities.
The Ohorongo Cement factory outside Otjiwarongo says there already are bilateral agreements with neighbouring countries, but challenges in their execution remain.
“This has been the case in the past and we foresee that the future will pose the same challenges,” says Frankleen Alberts, Ohorongo Cement’s customer relations and public affairs officer.
Ohorongo is already trading with neighbouring countries like Botswana, Angola, the Democratic Republic of Congo (DRC) and Zambia, albeit on a small scale due to overcapacity of cement in these countries, as well as the cost of logistics, Alberts says.
“Cement is a low-margin, heavy product, and exporting to landlocked countries further away is difficult due to the logistical costs involved. The Namibian cement industry is also land-based with our plant situated about 400 kilometres from the coast, making transport of product to the coast costly as opposed to other countries that have direct access to the coast for exports,” Alberts says.
The Namibian Grape Growers Association (NGGA) says Africa is becoming one of its key focus areas, not only for grapes but also for dates. Only about 10% of Namibia’s table grapes currently go to the African market, but growers are positive of the growth potential.
“[The] free trade agreement is one of the barriers that take some time to sort out and we are really glad that this one barrier is ticked off,” says Irene Visser of the NGGA.
For the NGGA the two major factors are infrastructure and logistics, which require huge financial investments but also provide huge opportunities.
Grapes are very perishable and spoil quickly if the cold chain is broken. They are also largely consumed by middle- to higher income groups, and generally by people older than 50 years.
“We take all into consideration before we enter a market. We are positive that step by step Africa will become more and more important,” Visser says.
The secretary for the Confederation of Namibian Fishing Associations, Ron Wolters, says each of Namibia’s fisheries has developed its own market, which often varies greatly from species to species.
Though Namibia exports fish to South Africa, the bulk of its fish goes to high-value niche markets in Europe and Asia.
The monkfish, rock lobster and crab fisheries have found high-value niche markets in Europe and Asia and are unlikely to export in meaningful volumes to other African markets.
“The hake sector is into value-adding, producing high-value consumer products for the retail markets of predominantly countries within the European Union such as Spain, Portugal, Italy, France and Germany. Consumers in these markets have the financial means to pay for the convenience the highly value-added products provide,” Wolters says.
The horse mackerel fishery, on the other hand, has a very different market because it is a relatively cheap source of protein and the Namibian sector is already exporting to a number of African countries.
“The industry lands around 340 000 tonnes annually, of which a growing portion is held back and sold on the local market, but the majority is sold in other African countries,” Wolters says.
The Namibian horse mackerel industry has built markets in the DRC, Zambia and Mozambique, but this species has reached its maximum sustainable yield, which means the fisheries ministry cannot increase its annual allowable catch, and output can therefore not be increased.
“While the potential for markets might open up, Namibia cannot increase its production to supply these new markets. What can happen, however, is that the new markets opening up can pay more for the horse mackerel, which would see a shift of product from the lower paying to the more affluent market. The ministry is encouraging value-addition such as canning of the horse mackerel, which could create new opportunities, but that would also mean a shift of product from one to another market rather than the increase of the total market,” Wolters says.
Roux-Ché Locke, Ohlthaver & List’s general manager of corporate communications, says the export of beer, one of the flagship products of the group of companies, is much more challenged by country-specific requirements on alcohol.
“[It] is to establish if these are part of the agreement; we think it is not,” Locke says, adding: “[It] is early days because the several committees that deal with commodity-specific questions still have to be set up.”
According to Wikipedia several committees will be established through protocols to assist with the implementation of specific matters. There will be committees on trade in goods and services, rules of origin, trade remedies, non-tariff barriers, technical barriers to trade, and on sanitary and phytosanitary measures.