Teamwork to make the dream work

Reduction of non-tariff barriers (including border and customs administration) could lead to trade gains in Africa of US$20 billion a year, compared to a potential US$3,6 billion from the elimination of tariffs alone.

Various countries and regional economic communities are making efforts to build better trade networks that can withstand recent supply chain shocks, such as the Covid-19 pandemic and geopolitical tensions. According to a new report by the World Economic Forum, the digital transformation of customs and border posts in Africa could improve efficiencies in processes like administration at these crucial crossing points.

The Growing Intra-Africa Trade through Digital Transformation of Customs and Borders report was written in collaboration with Deloitte and launched earlier this year at the convening of the forum Friends of the Africa Continental Free Trade Area (AfCFTA), a multi-stakeholder group that supports the implementation of the goals set out by AfCFTA through public-private collaborations.

The AfCFTA implementation, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.

“The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realisation hinges on the introduction of efficiencies, including the improvement of customs processes,” says Kavitha Prag, Africa lead of enterprise technology and performance at Deloitte Africa.

The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just 3% of global trade. The bank says boosting intra-regional trade requires improvement of physical integration, such as cross-border energy, transport, and connectivity infrastructure; strengthening cooperation by harmonising customs rules and procedures; and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.

“Digital transformation of border posts and customs is thus a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries,” Prag emphasises.

“Even after tariffs are lowered and simplified procedures put in place, the full benefits of the AfCFTA will not be realised unless non-tariff barriers to trade are also addressed,” adds Chido Munyati, head of Africa at the World Economic Forum.

The report calls for the following policy support to enable digital transformation:

• Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo.
• Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes.
• Action based on demand-driven interventions that lead to higher adoption of rates by all organisations and position intra-Africa trade as more cost- and time-competitive.
• Development of services agents’ skills to maximise the potential of digital solutions.
• Better coordination among AfCFTA members to establish Single Customs Territories.

A partnership closer to home is aiding cross-border transportation as well. Standard Bank has made a direct minority equity investment into Tripplo, a tech-enabled logistics solution.

Recognising the challenges of intra-African logistics and trade, Victor Chaitezvi started Tripplo in 2018, armed with a vision to reimagine the movement of African cargo. Tripplo operates a digital logistics platform that facilitates the safe and efficient movement of road freight cargo across the SADC, providing compliant transporters access to credible cargo owners and cargo brokers.

The platform also enables clients to manage all transporter company documents and provides detailed kilometre-by-kilometre trip itineraries for trucks moving goods on any SADC route, while housing detailed information of trucks, trailers, and drivers all in one place to ensure license, permit, and fee compliance.

“Chaitezvi effectively transformed the region’s long-established manually operated cargo logistics industry – in just three months,” says Darren Segal, head of Moonshots, Standard Bank’s business innovation division.

Standard Bank’s involvement has allowed it to extend many of the benefits of its own ecosystem – like Truck Fuel Net and Instant Money – to the Tripplo platform. The bank also provides Tripplo with foreign exchange rates, credit, and goods-in-transit insurance services. In addition, Tripplo has been given access to Standard Bank clients in need of transport solutions, with the bank in turn “offering Tripplo as a service to our own business banking clients as well as other entrepreneurs in our enterprise segment”, as explained by Sacheen Kala, head of the Founders Factory Africa (FFA)* partnership at Standard Bank.

By optimising and automating operations for small transporters across both its own and Standard Bank’s platforms, Tripplo increases profitability for cargo owners, cargo brokers, and transporters alike. “This takes place while extending Standard Bank’s own digital capability to a previously largely manually-managed industry,” says Kala.

Segal adds: “Working with FFA has developed a more venture approach to start-ups, broadening thinking on what a bank is, what a bank can do, and how a bank can relate to (and integrate its abilities with) start-ups.”

This partnership is a great example of what can be achieved by working together. Hopefully policymakers across the SADC region will follow suit and heed the World Economic Forum report. If not, inefficient border and customs processes in Africa will remain a significant concern and may result in some countries being unable to realise the full benefits of the Africa Continental Free Trade Area.

* Founders Factory Africa is a venture development company that designs, builds, and scales tech-enabled businesses across Africa.