The African Continental Free Trade Area (AfCFTA) holds massive potential to boost maritime trade on the continent, as trends in technology present tailwinds to the continent’s trade and transport, according to UNCTAD.
The AfCFTA agreement, which went into force on January 1, 2021, aims to increase intra-African trade by eliminating import duties- and to double this trade if non-tariff barriers are reduced.
In a report released by UNCTAD, maritime trade estimates show that the agreement could boost intra-African trade by about 33 per cent and cut the continent’s trade deficit by 51 per cent.
“The AfCFTA is expected to increase demand for different modes of transport, including maritime transport, which in turn will increase investment requirements for infrastructure and equipment– ports and vessels in the case of maritime transport.”
UNCTAD
Laying emphasis on the critical need to finance and develop transport infrastructure and services to support maritime connectivity will fully realize the benefits of the AfCFTA, UNCTAD said.
According to a study conducted by the UN Economic Commission for Africa (UNECA), with the time horizon of 2030, cargo transported by vessels would increase from 58 million to 132 million tons with the implementation of AfCFTA.
The study indicated that Comoros, Gabon, Gambia, Ghana, Madagascar, Mauritius, Mozambique, Namibia and Somalia will experience a surge in traffic through their ports by 2030 as a result of AfCFTA.
By implementing the necessary infrastructure projects, Africa’s maritime fleet is projected to increase by 188 per cent for bulk and 180 per cent for container cargoes.
However, there are challenges that continue to impede the progress of the maritime sector: the long port call times for vessels; significant liner shipping connectivity issues; and drops in maritime volumes due to disruption caused by the COVID-19 pandemic.
International Maritime Trade Recover Moderately
Having experienced huge declines in 2020, Africa’s maritime trade is expected to recover in output and cargo imports, but at a relatively moderate pace compared to other regions.
UNCTAD estimates Africa’s international maritime trade, including both goods loaded and discharged, to have fallen by 7.6 per cent in 2020. While 2021 saw a revival in world cargo trade, the recovery was uneven, with exports from Africa and the Middle East remaining untenable.
The continent’s contribution to global containerized trade remained relatively low in 2020, with container ports on the continent holding a 3.9 per cent share of global container port traffic, compared to Asia with nearly two-thirds and Europe with 14.9 per cent.
The report notes that the longest times in port for container ships are generally in Africa, notably in Nigeria, Sudan and Tanzania. Morocco is an exception, with one of the world’s shortest times for vessels in port. Tanger Med, Morocco, was also Africa’s best-connected port in 2020, the report stated.
After experiencing global contraction in 2020 by 3.8 per cent in 2020, maritime trade rebound later in the year, now expected to register growth of 4.3 per cent in 2021. Annual growth in maritime trade between 2022 and 2026 will slow to 2.4 per cent, compared to 2.9 per cent over the past two decades, the report stated.
While acknowledging the nascent recovery of the sector, the report painted a picture of unprecedented pressures in global supply chains, rise in freight charges, among others.
To realize a lasting recovery, this will depend on the path of the pandemic, UNCTAD Secretary-General Rebecca Grynspan said, adding that “[it] largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out.”
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