Africa’s trade shield

Introduction

The African Continental Free Trade Area (AfCFTA) has become the cornerstone of Africa’s economic integration agenda. Since trading officially commenced on January 1, 2021, the Agreement has sought to transform Africa from a collection of fragmented national markets into a single integrated marketplace capable of stimulating industrialisation, investment and sustainable economic growth.

The AfCFTA brings together 54 African Union Member States, making it the largest free trade area in the world by the number of participating countries. It represents a market of more than 1.4 billion people with a combined Gross Domestic Product estimated at approximately US$3.4 trillion. According to the World Bank, effective implementation of the Agreement could increase Africa’s exports by more than 80 per cent by 2035 while lifting an estimated 30 million Africans out of extreme poverty.

However, the success of the Agreement will not depend solely on tariff liberalisation. It will equally depend on Africa’s ability to build institutions that promote confidence, protect cross border trade, reduce commercial risks and guarantee the safe movement of people, vehicles and goods across national boundaries.

A harmonised continental insurance framework has therefore become an essential requirement rather than a desirable option. Such a framework would complement the objectives of the AfCFTA by providing seamless protection for traders, transport operators, investors and the travelling public while strengthening confidence in Africa’s single market.

The African Continental Free Trade Area in perspective

The AfCFTA is one of the flagship projects of the African Union’s Agenda 2063. It seeks to create a single continental market through deeper economic cooperation and policy harmonisation.

Its principal objectives include:

1. Eliminating tariffs on the vast majority of goods traded within Africa.
2. Removing non-tariff barriers that delay trade.
3. Promoting industrialisation through regional value chains.
4. Expanding the movement of goods, services, capital and eventually people.
5. Increasing Africa’s relatively low share of global trade.

The International Monetary Fund estimates that intra-African trade currently accounts for only about 15 per cent of Africa’s total trade, significantly lower than Europe and Asia. The AfCFTA therefore presents an unprecedented opportunity to reverse this trend.

Economic benefits of the AfCFTA

The successful implementation of the Agreement offers substantial opportunities for governments, businesses and citizens.

Economic Growth

The Agreement is expected to generate:

1. Expanded market access for African businesses.
2. Greater export diversification beyond raw materials.
3. Stronger regional manufacturing industries.
4. Increased foreign direct investment.
5. Improved competitiveness of African products in international markets.

Employment and Enterprise

The AfCFTA is also expected to stimulate:

1. New manufacturing and logistics employment.
2. Growth of small and medium sized enterprises.
3. Expansion of cross border entrepreneurship.
4. Increased youth employment.
5. Skills development through regional industrial clusters.

Consumer Benefits

Consumers across Africa stand to benefit through:

1. Lower prices resulting from reduced tariffs.
2. Greater product choice.
3. Improved quality of goods and services.
4. Better competition within domestic markets.
5. Increased digital commerce.

Persistent Challenges

Despite remarkable progress, significant obstacles remain.

These include:

1. Inadequate transport infrastructure.
2. Slow customs procedures.
3. Inconsistent implementation of trade protocols.
4. Exchange rate volatility.
5. Limited access to trade finance.
6. Weak insurance harmonisation.
7. Political instability in some regions.
8. Periodic xenophobic incidents that discourage cross border commerce.

The attacks against foreign African traders and businesses recorded in South Africa during 2008, 2015, 2019 and isolated subsequent incidents demonstrate that social cohesion remains an important component of successful continental integration. Economic integration cannot flourish where traders fear discrimination or insecurity.

Why Africa needs a continental trade and mobility insurance framework

Insurance remains one of the least discussed but most important pillars of trade facilitation.

As trade volumes increase under the AfCFTA, Africa requires a harmonised insurance framework capable of protecting:

1. Commercial vehicles.
2. Goods in transit.
3. Cross-border passengers.
4. Third-party liabilities.
5. Small-scale traders.
6. Transport operators.
7. Investors and logistics providers.

Such a framework would significantly reduce administrative costs associated with purchasing multiple national insurance policies while facilitating faster claims settlement and enhancing investor confidence.

The ECOWAS Brown Card Insurance Scheme already demonstrates that regional insurance integration is practical, efficient and sustainable.

The ECOWAS Brown Card Scheme Secretariat is always ready to provide technical guidance

The ECOWAS Brown Card Insurance Scheme Secretariat remains fully prepared to provide technical guidance, institutional expertise and collaborative support towards the development and implementation of a harmonised African Trade and Mobility Insurance Framework.

Having successfully coordinated cross-border motor insurance cooperation within West Africa for several decades, the Secretariat possesses extensive experience in insurance harmonisation, claims management, regulatory coordination, dispute resolution and institutional capacity building.

The Secretariat stands ready to work closely with:

1. The African Union.
2. The AfCFTA Secretariat.
3. Regional Economic Communities.
4. National Governments.
5. Insurance regulators.
6. Insurance companies.
7. Development finance institutions.
8. Transport associations.
9. Development partners.

Its practical experience provides Africa with an existing institutional foundation upon which a continental insurance architecture can be developed.

The way forward

To support the full implementation of the AfCFTA, African governments and institutions should prioritise the following actions:

1. Harmonise insurance legislation across Member States.
2. Establish mutual recognition of continental insurance certificates.
3. Develop digital insurance verification systems.
4. Integrate insurance verification with customs and border management platforms.
5. Strengthen dispute resolution mechanisms.
6. Expand digital payment interoperability.
7. Build technical capacity among insurers and regulators.
8. Promote public awareness of cross-border insurance protection.

Conclusion

The African Continental Free Trade Area represents the most ambitious economic transformation project in Africa’s modern history. While tariff liberalisation provides the foundation, sustainable success will depend upon institutions that strengthen confidence, reduce commercial risks and facilitate the seamless movement of people and goods across the continent.

A harmonised African Trade and Mobility Insurance Framework would provide one of those essential institutions. It would protect traders, encourage investment, reduce financial losses arising from cross-border risks and reinforce Africa’s commitment to economic integration.

The ECOWAS Brown Card Insurance Scheme offers a tested regional model upon which a continental framework can be built. More importantly, the ECOWAS Brown Card Scheme Secretariat is always ready to provide technical guidance, institutional expertise and collaborative support to governments, regulators and development partners committed to advancing this vision.

Africa’s trade future will ultimately be shaped not merely by agreements signed in conference halls, but by the confidence, safety and predictability experienced by every trader transporting goods across African borders. By combining political commitment with proven technical expertise, Africa can establish a continental insurance framework that secures the AfCFTA and accelerates the journey towards a prosperous, integrated and globally competitive continent.

By Dr Winfred Kwasi Dodzih

The writer is the Permanent Secretary, ECOWAS Brown Card Insurance Scheme

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