MARKETING INFORMATION
Its Finally Here! AfCFTA
– The New Dawn Of The
African Market
By Isaac T. Ngatia
3
0th 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 piece, the number had
gone up to 24 countries. 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 realized 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.
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. 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.
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 the African continent.
Intra-Africa trade has been dismally low,
yet statistics and trends show this is the
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
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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 to enable businesses
take advantage of this agreement. Hence,
marketers across Africa now have a
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.
Isaac is a marketing research
consultant within the Africa and
Middle East region. You can reach
him on this and related issue via
email at: [email protected] or
on Twitter @IsaacTN.