The African Continental Free Trade Area (AfCFTA) will boost intra-African trade by around 40 percent, with substantial benefits to the transport sectors, according to the latest estimates by the Economic Commission for Africa (ECA).
If fully implemented, ECA’s price watch report says the AfCFTA will significantly increase traffic flows on all transport modes: Road, Rail, Maritime, and Air. The free trade is projected to increase transport equipment needs significantly for all modes of transport, it projects.
The estimates on investment opportunities in the transport sector as a result of full implementation of AfCFTA were released during the Commission’s virtual meeting of African Finance Ministers on Thursday.
“The price watch report has not only looked at the headline of inflation figures but also at the contributing factors to these inflation figures that will inform the policy elements to contain inflation on the continent,” said Vera Songwe, ECA’s Executive Secretary.
The transport sector, she said, is important for implementing AfCFTA but is affected by inflationary pressures that are compounded by the ongoing Ukraine crisis.
Presenting the findings to the ministers, ECA’s infrastructure expert said the intra-African trade in transport services has the potential to increase by nearly 50% provided that the AfCFTA is fully executed.
“In absolute terms, over 25% of intra-African trade gains in services would go to transport alone,” said Robert Lisinge, Chief of Energy Infrastructure and Services Section of the Commission.
“Nearly 40% of the increase in Africa’s services production would be in transport,” he added.
The report also says regulations are required to prevent the influx of used vehicles that are not roadworthy. Road deaths are disproportionately high in Africa while the cost of crashes is estimated at between 1 and 5% of GDP.
Upgrading of infrastructure is also required to attract investment in transport equipment.
“Transport contributes significantly to Africa’s economies by more than 5% of value addition in over 20 countries,” Lisinge continued. “Significant transport share in services imported and exported stand at least 20% in 44 and 15 countries respectively.”
“Cost of equipment required by different transport modes to cope with AfCFTA is estimated at $411 billion,” he said.
“Fluctuations in transportation and construction prices may hamper renewal of Africa’s transport fleet and upgrading of critical infrastructure links,” Lisinge added.
The report shows that Africa’s aviation industry requires financial support after recording a revenue loss of $ 8.2 billion in 2021.
Based on the report findings, ECA advised African countries to mobilize resources for the transport sector given its importance to national economies and stabilize transport services and construction prices, among others.