The Africa Continental Free Trade Area’s (AfCFTA) effectiveness will come down to how fast the continent can roll out its One Stop Border Post program.

Trade in Africa has been largely dominated by 8 trade unions formed between different countries on the continent. SADC, COMESA, and EAC form the Tripartite Free Trade Area (TFTA) which combined constitute 53% of AU membership and a combined GDP of US$1.4 Trillion which is 60% of the African continent’s combined GDP. It also had a combined estimated population of 800 million.

The moving parts in the AfCFTA

AfCFTA: the body and its constituents

The whole premise behind the AfCFTA is to develop a continent-wide Free Trade Area across Africa where member states form an agreement between two or more countries to reduce barriers to imports and exports or the movement of goods and services across borders.

SADC, COMESA ECOWAS, and EAC are examples of these multilateral trade agreements within different African regions. The AfCFTA seeks to consolidate all of these into one unified free trade area. In as much as it will be the largest free trade area by virtue of population, its contribution to the value of global trade stands at 2%.

As of August 2023 only 1 African country, Eritrea, is yet to sign the AfCFTA agreement. 47 of the 54 signatories (87%) have deposited their instruments of AfCFTA ratification. On 7 October 2022, the AfCFTA Secretariat launched the AfCFTA Guided Trade Initiative in Accra to allow for commercially meaningful trade under the Agreement to commence for EIGHT (8) participating countries: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia, representing the five regions of Africa. This initiative is being used to pilot the operational, institutional, legal, and trade policy environment under the AfCFTA.

AfCFTA projections on intra-Africa trade

The AfCFTA came into effect on the 1st of January 2021 and since then, there have been a number of projections of its impact on intra-Africa trade. The goal is full trade liberalization across African borders starting with a 90% reduction in tariffs. Least Developed Countries (LDCs) and Non-LDCs which have 10 and 5-year phase downs respectively towards a 90% liberalization of tariffs.

The remaining 10% is to be split into 7% for sensitive products and 3% will be excluded completely, BUT, the excluded products may not account for more than 10% of their total trade. G6 countries including Ethiopia, Madagascar, Malawi, Sudan, Zambia, and Zimbabwe negotiated for a 15-year phasedown period to allow them to work on teething developmental issues they are facing.

With these measures put in place, the projected effects on trade on the continent are to the tune of US$60 billion (according to the IMF) added to export values and up to 5% income gains across the continent. Ivory Coast and Zimbabwe are predicted to see 14% gains in real income by 2035. Other estimations peg the increase in intra-Africa trade at 8% to 12% to values of US$5.7 to US$8.7 billion. The lower tariffs will reduce the price of goods and services produced in Africa making them more desirable. An increase in the uptake of Africa-produced goods and services means an improvement in Africa’s income and GDP.

Contribution of freight and customs

The high cost of customs delays

There are also arguments being made that if delivery times for freight carried by trucks are reduced by 20%, the gains in intra-African trade would be of a higher percentage than the gains from fully liberalizing trade across African borders. The road is the most dominant mode of transport for intra-Africa trade accounting for 76.7% of the total tonnage of trade across the continent. With such a high dependence on intra-Africa trade on road transportation, there needs to be an efficient mode of clearing freight traffic across all borders.

When looking at how reducing freight times by 20% can result in gains beyond the liberalization of customs tariffs, consideration has to be made of the cost of freight of goods by road. Trucks used for commercial cargo incur daily fixed costs of US$120 – $400. Traditional 2-stop border posts take 3 to 5 days to clear trucks which, when we factor in the daily fixed cost of a truck, can amount to US$360-$2,000 per truck in just idle costs per border. Close to 25% of total logistics costs are hidden costs related to transit time. These costs are then pushed forward to the consumer of those goods reducing the competitiveness of African goods.

Impact of One-Stop Border Posts (OSBPs) on Intra-Africa Trade

To reduce this impact on the cost of goods in transit, the One Stop Boarder Post (OSBP) was introduced in order to reduce wait times at border posts. The Chirundu border post became the first operational OSBP set up between Zimbabwe and Zambia. There are various configurations of OSBPs,

• Juxtaposed: Where clearing is done once at the point of entry (Chirundu).
• Straddling: Where a single clearing facility is created across the borderline (Gasenyi I/Nemba).
• Single Country (Wholy located): A single clearing facility is located on one side of the border (Cinkansé).

A total of 110 African borders have been listed to be converted to OSBPs. As of 2015, 10 OSBP’s were operational, 12 were still under construction and 5 were still undergoing planning.

The philosophy behind OSBPs is to remove duplication of clearing processes at border posts. There is a strong collaboration between the two countries on clearing protocols and with the use of ICT infrastructure, a sharing of this clearing information on both fronts.

Implementation of OSBPs in East Africa has led to transport savings and a reduction in stationary time at borders. Dwelling times for crossings such as Taveta-Holili (to Tanzania), Mutukula (to Uganda), and Busia (to Uganda) were reduced by 1,204 minutes, 1,032 minutes, and 640 minutes. Operational costs for transporters along the Nairobi-Kampala, Mombasa-Mwanza, and Dar es Salaam-Kampala routes have dropped by 14%, 11.7%, and 9.8% respectively.

In southern Africa, across the North-South Corridor (NCS) the Beitbridge, Kazungula, and Chirundu OSBPs have since switched to 24-hour operation to further reduce wait times at borders. Taking the Chirundu border as an example, clearing times before the OSBP stood at 2-9 days with some clearing taking up to three weeks. This time frame was reduced to between several hours and a day. Infrastructure developments such as communication between the 2 borders and the construction of a new bridge contributed significantly to the reduction in wait time at the border.

More efficient crossings brought about by OSBPs also improved revenue collections at the crossings. Between 2009 and 2012, Zambia’s revenues at the Churundu OSBP increased from US$10 million to US$20.3 million.