Unlocking African markets for LATAM exporters: customs and transport strategies

Hereunder is a transcription of some of the main points from the discussions at the yesterday's Webinar "Unlocking African markets: customs and transport strategies" organized by the Latin-Africa Chamber of Commerce (CLAF), with some additional information.

Trade Relationships Between Latin America and Africa

Trade relationships between Latin America and Africa, while historically significant, are relatively modest in volume, with a positive balance in favor of Latin America. However, this trade shows a growing potential. Africa exported 12.3 billion US$ to Latin America and Caribbean in 2024, while Latin America (combined with Carribean nations) exported 24 billion US$ to Africa in the same period. Trade flows represent a small percentage of both continents’ total global trade (e.g. Africa's exports to the EU were close to 200 billion US$ in 2024). Trade is also highly concentrated, involving a limited number of countries, primarily larger nations and oil exporters (e.g., Brazil and Argentina on the Latin American side; South Africa, Nigeria, and Egypt on the African side).

Latin America primarily exports agricultural commodities to Africa, while Africa's exports to Latin America include oil and mineral resources. There is a notable concentration of oil trade, with Brazil historically importing Nigerian oil. Despite low current levels, there is wide space for new business opportunities in both directions due to potential economic complementarities. Both regions are rich in natural resources and have developing economies. Areas like renewable energy, environmental protection, and various agricultural sub-sectors offer avenues for increased cooperation.

Recently, there is a strong emphasis on strengthening "South-South" relations to reduce dependency of Latin America and Africa on traditional North American and European partners. Brazil, in particular, has a clear and historical policy of engagement with Africa, having opened numerous embassies since the 1960s. Recent agreements, such as the February 2025 Memorandum of Understanding between the Bolivarian Alliance for the Peoples of Our America—Peoples' Trade Agreement (ALBA-TCP) and the Southern African Development Community (SADC), highlight a commitment to deeper cooperation across various sectors, including industrialization policies.

With regard to barriers that limit deeper integration between the two continents, the geographic distance and limited direct connectivity are the main ones. Direct shipping routes from Latin America to Africa and vice versa are less frequent than those connecting these two continents to Europe, North America and Asia, leading to higher transport costs. Limited awareness of business opportunities, market demands, and regulatory environments on both sides is another element that hinders trade. Additionally, there are low levels of direct investment between the regions. To date, only two trade agreements link Latin America and Africa: a Free Trade Agreement between Egypt and Mercosur (in force since September 2017, with a 10-year tariff liberalization calendar ending in September 2026) and the Mercosur-SACU Preferential Trade Agreement (in force since April 2016, offering tariff reductions on about 1,050 tariff lines ranging from 10 to 100%).

The most direct connections link major ports in Brazil and Argentina (e.g., Santos, Rio de Janeiro, Buenos Aires) primarily with West African and Southern African ports (e.g., Lagos, Tema, Abidjan, Durban, Cape Town) or with Tanger Med in Morocco for transshipment to other African ports. The vast majority of cargo travels via transshipment through major global shipping hubs, mainly in Europe. Goods from Latin America first reach major European ports (e.g., Rotterdam, Antwerp, Valencia, Algeciras, Gioia Tauro) and are then transferred to vessels destined for African ports. This consolidation at European hubs is common due to the relatively low volumes of direct Latin America-Africa trade. A less common option is transit through Asian ports like Singapore, Shanghai, or Hong Kong, which also allows for cargo consolidation before re-shipment to Africa.

A portion of cargo between Latin America and Africa uses air freight, significantly more expensive than maritime transport. It is primarily used for perishable goods, short-shelf-life products, or time-sensitive items like electronics, medical devices, and high-end fashion, where rapid delivery is crucial due to constantly changing trends. Cargo from Latin American countries on the Pacific coast (e.g., Colombia, Chile, Peru, Ecuador) to the West or South coast of Africa transits through the Panama Canal. However, the volume for this specific direct route remains limited compared to trade from the Atlantic coast.

Key considerations on these routes

Many African ports, especially on the East coast (e.g., Mombasa or Dar-es Salaam), are not directly served by international shipping companies having ships departing from Latin America, as they are not on main global routes linking the two continents. They are primarily served by feeder vessels from larger regional hubs (e.g., Tanger-Med Djibouti or Durban). Port of Walvis Bay (Namibia) is a growing regional hub, particularly for imports and exports in Namibia and parts of Southern, Central and West Africa.

Barriers to Intra-African Trade

The most significant hurdle preventing businesses from trading effectively within Africa is the inadequate transport infrastructure which results in elevated transport costs across Africa, which are exceptionally high compared to other regions. Most African countries suffer from a shortage of well-maintained roads. Existing roads often deteriorate prematurely due to overloading practices by truck drivers. The African transport market is highly fragmented, with a few large multinational companies and many small, often informal, transporters. To remain competitive, smaller operators frequently overload their trucks, exceeding axle load limits designed to protect roads. While this allows them to transport more goods and stay competitive, it comes at the cost of accelerated road degradation. Since Africa imports significantly more than it exports, this causes an imbalance in cargo movement. Large volumes travel from seaports to inland destinations, but there is much less cargo moving in the opposite direction. This often forces importers and exporters to cover the cost of empty return trips for trucks or containers, as transport companies cannot optimize their routes due to a lack of return cargo. However, the rise of e-logistics solutions (like Lori Systems, TAI Plus, Kobo360, and Truckr, etc.) is helping to mitigate these costs by matching transport demand and supply, eliminating empty trips, and optimizing truck turnover times.

Long queues and bureaucratic procedures at borders further contribute to high road transport costs in Africa. Moreover, there is a limited use of multimodal transport solutions. The efficient combination of different transport modes (e.g., maritime, river (or lake), road and rail) is underutilized in Africa. This is sometimes complicated by strict regulations on licensing multimodal operators. In addition, compared to other continents, Africa has a very limited and underdeveloped railway network. Most existing railways primarily connect coastal seaports to inland destinations, with very few offering interconnections between African states. Currently, 16 African countries still lack railways. Furthermore, most of Africa's railways were built during the colonial period and have significantly aged due to years of underinvestment and lack of maintenance. Vandalism and theft of railway materials (like copper cables) exacerbate this problem. As a result, road transport has become the dominant mode, carrying an estimated 80% of goods and 90% of passenger traffic. This overreliance inflates transport costs, making African products less competitive globally and leading to congestion, accidents, and increased dependence on fuel imports. Congestion at ports and border delays further amplify these costs and delays. Cost-effective water transport is also restricted, as many rivers are unsuitable for navigation or only partially navigable.

Tariff vs. Non-Tariff Barriers Across African Regions

Although the average Most Favoured Nation (MFN) tariff duty rates in Africa are considerably higher than in Latin America (12.3% continental average vs. 6.8% average in Latin America, see figure below), Non-tariff barriers (NTBs) are the main impediment to African trade, being particularly pervasive.

NTBs include cumbersome customs documentation, administrative hurdles, and immigration processes, arbitrarily imposed product quality standards (Technical Barriers to Trade and Sanitary and Phytosanitary Measures), and checkpoints along trade corridors. The nature of both tariffs and NTBs varies significantly across regions. Many RECs have established online portals (like TradeBarriers) to report, monitor, and resolve NTBs, some even offering statistics on the most recurrent types. A continental NTB monitoring system has also been developed within the framework of the African Continental Free Trade Area (AfCFTA). For the full list of the NTB monitoring systems in Africa, read this.

The most frequent NTBs across all African regions and countries are related to excessive bureaucracy at borders and corruption. These issues lead to lengthy delays, unofficial payments, and unpredictable enforcement of regulations. With regard to specific African Regions, some variations can be noted. Based on the information on the TradeBarriers.org platform, in East Africa (EAC), common NTBs include cumbersome customs documentation, complex administrative and immigration procedures, and issues with quality inspection and transit procedures. There are also some instances of arbitrary Sanitary and Phytosanitary (SPS) measures affecting exports of animal and agricultural products. In SADC and COMESA, key NTBs relate to cumbersome customs procedures causing significant delays and the persistence of some quota restrictions. SPS measures often are applied for market protection rather than genuine health concerns. Product quality standards also pose complications for extra-African countries exporting to these regions due to a lack of full harmonization within these blocs. This means that products meeting standards in one COMESA or SADC country might not automatically meet them in another, necessitating multiple certifications or adjustments. Additionally, regional standards may not be fully aligned with international ones (e.g., ISO, Codex Alimentarius), requiring additional testing. The conformity assessment process itself (testing, inspection, certification) can be time-consuming and costly due to limited mutual recognition agreements with Latin American countries for testing and certification.

On the other hand, in West Africa (ECOWAS and UEMOA), cumbersome customs procedures, widespread roadblocks, and frequent requests for informal payments by border agencies are the main NTBs.

Africa's Regional Economic Communities (RECs)

Africa has several major Regional Economic Communities (RECs) that serve as building blocks for continental integration. Each of them aims to promote economic cooperation and integration among its member states, with varying degrees of success. Prior to the 2006 AU Assembly decision establishing a “Moratorium on the Recognition of RECs”, there was a proliferation of RECs with diverse mandates (trade, peace, security, food security, transport, energy, water). To curb this, the AU suspended the recognition of new RECs, except for eight. Most RECs aim to eliminate internal tariffs among member states, progressing towards Free Trade Areas (FTAs) and eventually Customs Unions with common external tariffs. Progress varies among them. Some African countries, especially those outside major customs unions, heavily rely on border taxes for fiscal revenue, making tariff elimination a complex process that requires alternative revenue streams. Among the main objectives of RECs is the reduction and ultimately elimination of tariffs and non-tariff barriers among member states. They work towards common policies, standards, and regulations in areas like customs, trade, and even monetary affairs in some cases. However, their mandate covers many other areas, depending on the establishment Treaty of each REC (e.g., peace, fight against desertification and other climate-related hazards, water resources management, environmental protection, etc.). An important objective that RECs pursue is to promote the development of cross-border infrastructure projects (e.g., roads, railways, energy grids) to facilitate trade, which they do through the adoption of regional master plans. Most RECs have also adopted protocols to promote the movement of people across borders (e.g., ECOWAS's 1979 Protocol). Overlapping memberships in African regional blocs significantly hinder rather than foster trade efficiency and regional integration, creating a "spaghetti bowl" effect.

Challenges for Businesses doing business in Africa

Increased Transaction Costs due to varying Rules of Origin (RoO): Different regional blocs have distinct and often complex rules of origin, making it difficult and costly for businesses to determine which preferential tariffs apply when trading across multiple blocs. This increases administrative burdens and compliance costs.

Conflicting Policies and Regulations: Businesses face a complex web of differing standards, customs procedures, and regulatory requirements when operating in countries belonging to multiple RECs. This lack of harmonization increases the cost of doing business and limits economies of scale.

Regulatory fragmentation and complexity: Exporters may need to fulfill similar but slightly different requirements for various blocs, leading to the need to hire specialized experts.

Market Fragmentation: Instead of creating a seamless regional market, overlapping memberships by African nations to several RECs lead to fragmented markets due to inconsistent application of trade liberalization measures and differing external tariffs. This restricts sub-regional growth potential and limits the benefits of integration. The AfCFTA aims to rationalize this complex scenario by creating a single continental market, but this is a long-term process.

You can listen to the full webinar by clicking on the image below.