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Largest demand for trucks and rail wagons due to AfCFTA implementation to come from West Africa

During the 5th Africa Business Forum organized on 7 February 2022 by the United Nations Economic Commission for Africa (UNECA), the findings of a report titled “Implications of the African continental free trade area for demand for transport infrastructure and services” were revealed. The report, now available online, argues that the implementation of the Agreement will lead to an increase of the demand for freight transport services in the continent by about 50 percent. To accommodate such an increase, it will be necessary to upgrade and expand logistics infrastructures in Africa, but also transport services. If these two conditions will not materialize, the realization of AfCFTA’s benefits will be compromised.

For transport and logistics companies, upgrading and expanding transport services primarily means to invest in new trucks, vessels, railway wagons and aircrafts. Investing in new trucks is critical as currently 76,6% of intra-African trade moves via road (against the 22.1, 0.9 and 0.3 percent moved, respectively via maritime, air and railway transport). Road transport will therefore continue to be used as the prevalent mode of freight transport in the continent. Because of this, the study estimates that more than two million additional trucks (1,945,141 to be used for bulk transport and 268,438 for containerized traffic) will be needed. The largest demand for new trucks will come from West Africa (39.3%), the smaller from Central and East Africa. In West Africa, the increase of demand in new means of transport is expected to come from operators carrying out transport operations within this region, while another 19.8 per cent of the demand will come from transport companies in West Africa serving Southern Africa countries and another 9.9 per cent from Southern African logistics companies transporting to West Africa, as shown in the following figure:

Figure 1: Truck fleet needs by African regions

Truck fleet demand

However, attention needs to be devoted also to the improvement of logistics services. According to the World Bank development indicators, Africa has the lowest overall logistics performance index worldwide. In 2018, its overall logistics performance index was 2.46 on a scale of 1 to 5, compared with 2.87 globally, and with the 3.5 index in the European Union and North America.

With regard to rail transport (whose utilization rate is estimated to grow to 6.8% from the current 0.3%, more than the other modes of transport), the estimated demand is of about 170,000 wagons (132,857 for transport goods in bulk and 36,482 container wagons). Also in this case, the largest demand of which will come, again, from West Africa for carrying out regional transport operations (48.4 per cent), while another 19.6 per cent and 11.5 per cent will come from railway lines transporting cargo to Southern Africa and North Africa, respectively.

The other prevailing modes of transport, in order of importance, are the maritime and air transport, that currently move respectively 22.1 and 0.9% of African trade. Regional and continental maritime cabotage activities (i.e; the carriage of goods by sea or air from one coastal or inland point in an African country to other points located in other African countries or regions) are also expected to grow with the AfCFTA implementation. This, according to UNECA, will generate the need to procure 135 additional vessels and 243 aircrafts in the continent to support the new trade flows. The 10 critical ports that will shape the future architecture of African maritime cabotage transport will be the Port of Maputo (Mozambique), Toamasina port (Madagascar), Port Louis (Mauritius), Port of Takoradi (Ghana), Port of Fomboni (Comoros), Walvis Bay (Namibia), Port of Mogadishu (Somalia), Port of Banjul (Gambia), Port of Djibouti (Djibouti) and the Port of M’Bya Terminal in Gabon.

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