Hope rests with AfCFTA to reduce trade duties
How the Africa Continental Free Trade Area (AfCFTA) could boost trade for the refrigeration industry.
The Africa Continental Free Trade Area (AfCFTA) is designed to open up borders, and facilitate and boost internal trade within Africa. Once fully implemented, AfCFTA will be the largest economic trading block in the world. Right now, its potential impact is being studied by all industries. Staycold International MD, Lena le Roux, chats to Retailing Africa about the needs of the refrigeration industry in Africa with the opening up of trade on the continent.
What is the status of the refrigeration industry in Africa?
In Africa refrigeration is a luxury. The markets still want it, despite the fact that electricity is so expensive and often disrupted. The desire is still there. Our product is liked because it cannot rust; cannot sweat; will keep the temperature; is made of robust components built for Africa; and that the compressor won’t fall off its base. They know it is a solution, but they can’t afford it because of trade duties. I get frustrated with all these grand treaties and agreements. If AfCFTA works, it will solve the problems, but I’m sceptical… is it executable, is it sustainable, is it really going to be the answer?
How could AfCFTA create positive impact?
What struck me about this agreement and what resonates with me, is that only Africa can solve Africa’s problems. Through our business, I have visited Kenya, Tanzania, Nigeria, Ghana, Botswana, Namibia, etc; and one universal issue that stands out, is how many misconceptions there are of the continent. People living outside of Africa have no reference of its resilience. When you visit the bottlers in Europe, their teams have no reference for the challenges and conditions on the ground. They are trying to find solutions to problems they do not understand; and they don’t want to listen. There is opportunity to be had, but the arrogance of the West does not see it. When I first visited Kenya, my observation was that Africa does not have an identity crisis. Africa knows who she is. It is the first world countries in the West who are still trying to figure out who they are. Africa knows.
Describe the challenges you see?
What is holding us back is our lack of cooperation on the continent. AfCFTA is a great undertaking. But it is high level. Who will apply the rule? We get the SADC certificates, but then still get stuck at customs which doesn’t care about our certificate or the customer which doesn’t get delivery. And there is no way to resolve it; no one to ask. Trade should be a priority, but it isn’t. It boils down to job creation, to employment, but it falls flat on the basic principles. We get the philosophy right, but we get the fundamentals wrong. To facilitate trade, there needs to be commitment, most of all. The problem is that the people who started this process are not the ones who see it implemented.
What would you like to see transpire?
It is a massive challenge to be competitive when import duties are being implemented at 40% to 70% across Africa. How do I compete with Asian and Eastern imports that are not as robust; not fit for purpose; that will not give you the benefit you pay for? We have a superior product, we know that; and we focus on sustainability, we support our communities. It kills my industry to face duties of 47% as it makes it unsustainable to compete. We lost business from one of the biggest bottlers in Nigeria because they did not realise that they had to budget for 47% import duties.
What is the solution you envisage?
The solution is to be competitive – and that is Africa’s problem. There is a lot to understand on the ground. Europe cannot understand the market on the ground. In Tanzania, they do not use fridges and do not drink cold beers, soft drinks or water. Because it is so hot there, their culture says that if you drink cold drinks, you sweat too much and dehydrate. Then how do you sell cold beer? It is little things like that which make a huge impact on approaching a customer and pitching your product. In Kenya, they took me to a shop with one of my beverage units and the shop owner told me it was great for keeping his meat cold, and asked me to drill holes in it for a broomstick to hang his pigs from at night. All coolers are used for everything. So, the next time we design a cooler, we need to consider what happens if the shelves are taken out for something else, and it is not only used for beverages. It’s the brand exposure, not the application. If pigs are hung in my beverage cooler at night, then that is what is needed.
How is your business innovative?
That relationship with our customers. That need to understand our customer’s requirements at grassroots level and coming up with practical solutions. The practicality of having a little spaza shop with a roof covered with sunshade at night – you don’t need a stainless steel food-grade unit; you need something that will keep cold, be easily serviced, can fit in your small space and keep cold over periods without electricity. That is all you need. It is that understanding and how we can apply it practically, that we can solve customer challenges.
What do you hope will happen with AfCFTA?
I sincerely hope that AfCFTA is successful. The intent is right. I hope it plays out to be the solution we all hope it will be. There is massive opportunity for trade in Africa. You will not find the resilience here anywhere else in the world. Africa deserves to be successful. We have insurmountable problems, but Ethiopia and Egypt are the two fastest growing economies in Africa, and if they can do it after being flattened by war in recent times, we all can. Just give us our Africa passport to ease trade and enable travel, quicker and with shorter turnaround times. It just makes sense.
Main image credit: Unsplash.com.
Staycold International is a sponsor on RetailingAfrica.com and with Retailing Africa, will be publishing a series of thought leadership articles on the refrigeration industry in South Africa and Africa. Staycold International is a South African refrigeration company which manufactures self-contained commercial fridges and freezers for South Africa and the African continent from their factory in Parys, South Africa. Their business began in 1979 in Parys, where their home base factory is still located; and where they manufacture units primarily for the beverage and hospitality industries. They have been running for over 40 years with the principles of quality, efficiency, performance, reliability and durability.
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