Continuing attacks against transporters in South Africa threaten to derail the successful implementation of the African Continental Free Trade Area (AfCFTA) agreement that was again endorsed by African leaders at the recent African Union Summit. If order is not restored, the consequences could be catastrophic – not only for South Africa, but for the rest of Africa.
Transport is the ultimate enabler – of both infrastructure development and trade. It serves many sectors of the economy such as manufacturing, health, agriculture, mining, consumer goods and food. It unlocks value chains and all of the job opportunities that come with these activities.
All economies depend on the movement of goods and people. By connecting areas of economic activity within a country and between African countries, transport increases access to much-needed markets and services. Transport provides the means for emerging markets and developing countries to integrate into the global economy. It is therefore a crucial aspect of the pre-conditions needed to make AfCFTA a success.
AfCFTA – Unprecedented Growth Opportunity
The Agreement intends to create a single Continental market for goods and services, as well as a customs union with free movement of capital and people in the future. AfCFTA creates the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.
The World Bank report AfCFTA: Economic and Distributional Effects, issued earlier this year, notes that AfCFTA will significantly boost African trade, particularly intraregional trade in manufacturing. The volume of total exports could increase by almost 29% by 2035 relative to the baseline. Intracontinental exports would increase by more than 81%, while exports to non-African countries would rise by 19%.
Implementing the AfCFTA will help lift millions of Africans out of poverty, spur wage increases and grow the economy of the Continent by up to 3%.
The benefits that South Africa – and the rest of the African continent could derive from the successful implementation of the AfCFTA are numerous and far-reaching: increased trade, poverty alleviation, job opportunities, and greater economic inclusion. In essence it offers an unprecedented, desperately needed, incomparable opportunity for the Continent to become an economic force. This will, however, only be achieved if there are efficient supporting services that allow African traders to take advantage of the preferential market access. Transport and logistics are arguably the most important factors in the short term.
Attacks Against Transporters Derail Growth in South Africa
In South Africa, transport and logistics accounts for 11% of the country’s GDP – a staggering R480 billion. About 50% of the South African economy is made up of goods, with logistics a service that relates to the transport, storage and distribution of these goods. More than 80% of goods in South Africa are transported by road. Over the festive and holiday season, the volumes of goods transported reaches its peak, as transport companies ensure that goods are delivered on time to consumers. With companies trying to recover from the devastating impact of the COVID-19 pandemic on business and trade, the unimpeded, free flow of goods within South Africa and to and from African countries has become crucial.
The unprovoked, unlawful and violent attacks against transporters in South Africa are, however, continuing. According to recent media reports, there were 84 attacks in November alone, and 35 trucks were burnt. Billions of Rands of precious cargo have been destroyed. In one day in November, nine trucks were set alight on the N3 highway – but not before the drivers had been attacked and their cargo looted. This is pure anarchy, economic sabotage and a threat to national security.
This cannot continue. It is threatening the country’s future and destroying lives, companies, employment opportunities, economic activity, goods, vehicles, facilities, roads and foreign investment to move goods through South Africa into Africa. It will have far-reaching, devastating consequences.
The costs of these actions are not just borne by the transport industry but by all consumers who could face increased prices for goods in the future.
Government Needs to Take Action
A resolution of the problem needs to become an urgent priority for Government. It needs to take urgent action to protect its citizens and ensure their Constitutional rights of freedom of movement and freedom to do business.
Membership-based industry organisations have worked tirelessly through various industry structures, met on numerous occasions with relevant members, been involved in the Ministerial Task Team created to deal with the problem, and forwarded proposals on how to resolve the crisis to Government. However, the measures required by government agencies have either not been taken or addressed urgently enough.
Action is needed. Now. If not, the whole of Africa will suffer the ramifications for decades to come.
Regional integration is essential to building markets, creating robust and diverse economies, increasing opportunities for growth, and attracting new sources of investment finance. There is a need to recognize that regional integration is paramount for Africa, where 40% of the population and one-third of the economies are trapped in landlocked countries.
By Road Freight Association, South African Association of Freight Forwarders and South African Express Parcel Association.
The post Transport and Freight Industry Needs Urgent Government Intervention appeared first on Truck and Freight Information Online.