Why invisible tariffs should akeep us awake at night

A recent forum hosted by Trademark Africa and the Editors Guild, focusing on non-tariff barriers in Africa, was an eye-opener even to experts.

Tariffs, better known as import taxes, are the tip of the iceberg. Non-tariff barriers are the part below the water.

Tariffs, in addition to raising government revenues, protect the domestic market, which is why they are popular with politicians. In the short run, they create jobs.

In the long run, they stifle competition and innovation, slowing down the economy and job creation. 

Trade is more like romantic relationships. We focus more on what we can see: beauty or even attire. What really matters is the heart, the feelings. That feeling determines if a marriage or a relationship works or fails.

Non-tariff barriers are like feelings; they determine if the trade flourishes or not. And they are many. Think of letters of origin, transit fees, health certificates, standards, cultures and attitudes.

The Comesa or East African Community (EAC) lists almost 25 of them. Any government can wake up and add to the list. Rarely admitted is that traders can influence tariffs to control the market and keep off rivals. Free markets are rarely that free.   

Trade among African countries was only 14 per cent, says Afreximbank in 2024. Poor communication, extreme nationalism and links to the former colonial power limit intra-African trade.

We also produce the same primary products, making trade hard. Value addition could differentiate our products and earn a premium. But we need technology to add value. And we dislike science and technology. We can add that our dislike for science and technology is a non-tariff barrier to trade.

Think of it, Japan gets iron like many other countries, they add value to make steel and cars. Silicon becomes transistors and wafers. Oil gives us plastics, rubber becomes tyres, and Coltan become capacitors.  

Our attitudes are another non-tariff barrier. What do Kenyans think of Tanzanians, Nigerians, and Americans, among others? That determines if we trade more or less with them. That is where movies and media come in to shape our attitudes. 

Why did Nigerian movies come before they started buying off our banks? And that is not from me, marrying our girls.

What of information? It’s a big non-tariff barrier. How much do we know about other markets? What do I need to start exporting avocados to the Middle East? How would I start exporting snails to West Africa? Are snails wild or domestic animals? Information can come through the school curriculum or the media. We know so little about our trading partners. Think of Indonesia, with a population of 285 million people or Pakistan with 251 million.

We know so little about these big markets. But more of a country with 10 per cent of that population. We trade more with our neighbours but know so little about them beyond stereotypes. What do we know about South Sudan, DR Congo, Mauritius or Somalia?

Western and eastern powers know more about these countries than us; no wonder they trade more with them. 

We can add jealousy to the list of non-tariff barriers. We dislike seeing our neighbours doing better than us. Regional blocs ought to reduce jealousy so that we rise together. Have they done that?  Let us not forget traders themselves: Foreign traders and investors are often treated better than locals in most African countries.

Is that a non-tariff barrier? Noted, you often feel more at home in a non-African country than in an African country?

The forum estimated that non-tariff barriers hold $300 billion (Sh39 trillion) worth of African trade, so much that we could wean Africa off foreign debt and raise our living standards. 

Normal tariffs are easy to remove, but when tariffs are in our minds, tied to our cultures, they persist. How do we make Africans believe our products and services can be as good as imported ones? Why don’t we give our children names from neighbouring countries e.g Ikemefuma Kamau or Boateng Musyoki? 

Removing barriers

The starting point in removing non-tariff barriers is accepting that we are interdependent; we need each other in trade. We are better working together, not undercutting each other. And in trade, charity starts at home. Remember the gravity theory of trade?

The African Free Trade Area is a great idea, removing barriers to trade. But we often have normal tariffs in mind, not non-tariff barriers. The African Continental Free Trade Area (AfCFTA) has a non-tariff barrier to online reporting. Hope actions are taken.

Beyond non-tariff barriers, we must focus on what to trade, what products, and what services. What we trade is sometimes more important than who we trade with. Never mind that branding and pricing shift our loyalty. How did China crack our market?

Another way to reduce non-tariff barriers is to see the world as our market; it’s bigger and richer.

Compare the market for Facebook or Google with the market for coffee or tea. How are we prepared for the expiry of the African Growth Opportunity Act (Agoa) and China opening its market to us tariff-free? While at it, why do we demand yellow fever vaccination across Africa and not in the USA or Europe?