Building Bloc: Africa’s new free-trade hope

Engraving_country_Bloc-cropLast December, amid two days of fanfare, a new long-haul 787 passenger route was launched from Durban, South Africa. The four-times-per-week service was hailed by local provincial officials as a triumph for the region and would begin “opening up new markets for our goods around the world,” as well as delivering tourists and tourist money, to the continent.

And which carrier is now facilitating this foreign trade boom? Qatar Airways, based not in Africa, but in the Middle Eastern city of Doha. It says much about the state of the African airfreight industry that a new Doha-Durban route, with ample bellyfreight capacity, is owned by a foreign carrier – especially one from the Middle East. Qatar now has 21 flights a week to South Africa from its Doha hub. Now that’s an open market.

For most of the last decade, the surge in cargo traffic that has made Africa one of the world’s fastest-growing airfreight markets has been dominated by carriers based in the Gulf Region, China and Europe. One of the few exceptions is Ethiopian Airlines, a rare African carrier that has a substantial cargo division modeled on the global airfreight networks of its foreign rivals.

“Foreign carriers account for 85 percent of the traffic moved to and from the continent and have far significant advantages compared to African carriers,” said Sanjeev Gadhia, CEO of Kenyan all-cargo carrier Astral Aviation. The reason, Gadhia said, is a lack of liberalization in the aviation policies of most African nations. While foreign-operated international routes have been a boon for forwarders and international shippers near the major hubs of Cairo, Addis Ababa, Johannesburg and Nairobi, most of the profits end up in the accounts of the foreign carriers, and very little is invested in improving air cargo infrastructure elsewhere. Currently, intra-African cross-border trade only makes up about 10 to 12 percent of the continent’s economy.

Last year, however, after years of hard-fought negotiations among African nations, a new free-trade bloc has been formed that is aimed at addressing Africa’s lack of interconnectivity. Called the Tripartite Free Trade Area (TFTA), the new zone was formally established in June 2015, comprising 26 nations, with a combined population of 632 million people, or 57 percent of Africa’s population. Altogether, the

TFTA bloc has a combined GDP of US$ 1.3 trillion, representing 58 percent of Africa’s total GDP. The vast size of the area represented – about 17 million square kilometers – is roughly equal to that of Russia, making it one of the largest free-trade zones in the world, forming an unbroken corridor from Cairo to Capetown.

The TFTA gives Gadhia hope that the continent will finally begin opening up its borders for trade with neighboring countries. “Africa remains the most unconnected continent in the world, with several constraints between East and West Africa, East and South Africa, South and West Africa,” he said.

“[TFTA] poses an excellent opportunity for freighter operators to open new markets, which have been disconnected not only in Africa but the rest of the world.”

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