Business

African free trade deal to open up continent’s tech sector

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Carel Coetzee, CEO of systems integrator NEC XON.
Carel Coetzee, CEO of systems integrator NEC XON.

The African Continental Free Trade Agreement (AfCFTA) will open up infinite opportunities for technology firms across the African continent.

This was the word from Carel Coetzee, CEO of systems integrator NEC XON, speaking at the NEC XON Summit 2019 taking place at Sun City in the North West province today.

The AfCFTA is a free trade agreement among the 55 African Union nations. It is the largest in the world in terms of participating countries since the formation of the World Trade Organisation.

The agreement was established by the African Union and requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent.

Highlighting on the potential offered by the AfCFTA in the IT sector, Coetzee called on technology firms across the continent to take advantage of the enormous opportunities it presents.

“The AfCFTA creates a marketplace of 1.2 billion people with an estimated combined gross domestic products of $3.4 trillion across the continent. We are expecting the first tariffs to be fixed by next year and this creates an enormous opportunity for technology firms within the continent,” explained Coetzee.

“At the moment, we are importing a lot of technology equipment and there are not enough incentives for global organisations to invest in African countries. Within this agreement, we will have reduced import tariffs for technologies produced within the continent.”

The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52% by 2022.

When observing inter-continental trade across various continents, business trade within Europe is around 67% and Asia is 58%, while North America is on 48%. However, Africa only sits on an alarming 15%, Coetzee pointed out.

“This means that there are a lot of trade relations happening within various continents but in Africa, neighbouring countries don’t have much business relations with each other. So we have more imports from outside the continent than we do within the continent, meaning we have stronger external relations and this represents a huge gap and opportunity.”

Providing an example, he made reference to a recent partnership signed between NEC XON and Swedish backup solutions manufacturer, Incell International, to use its smart lithium technology to serve the needs of wireless and tower communications operators across Africa.

“NEC XON is investing in Incell to create lithium batteries to provide backup power for telecoms sites, but the import duties from Sweden to Nigeria are around 25%. If we could manufacture those batteries within the African continent, we could supply them for much less, improving trade within the continent,” he explained.

“This will provide opportunity for OEMs [original equipment manufacturers] to start manufacturing technologies within the continent and provide more affordable services, not only to the continent but also to global organisations, stimulating investment and opening up employment, which will be the main driver of the economy.”

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