Utku Bengisu: We must take real steps to build the future with African SMEs

"Are We Ready for the African Continental Free Trade Area Period?"

Is “One Africa” possible? African countries, which have been fighting for development in difficult conditions for years, are looking for ways out with the pressure of demographic power and the increasing middle class. Although the African Continental Free Trade Area Agreement enters into force on January 1, 2021, its implementation principles and whether a full free trade implementation is possible are still a matter of debate.

The AfcFTA Secretariat continues its efforts to implement this powerful idea. He held a very important meeting in Ghana on October 7, 2022. Ministers responsible for trade from Rwanda, Kenya, Egypt, Cameroon, Ghana, Tanzania, Tunisia, Mauritius attended this meeting and selected and approved products for preferential goods transitions for the first time, called the 'Guided Trade Initiative'.

With this process, which was put into practice as a pilot, 8 countries approved tax-free trade in the products they agreed on jointly. With the application, Rwanda's first coffee was sent to Ghana duty-free. With the published guide, it was stated which products will be exempt from customs and how the transactions will proceed. The application is expected to be expanded in the coming period.

As Africa becomes a single and common market, is Turkey ready for this transition? What instruments do you have? In this process, I think that Turkey's SMEs will be the biggest power that Turkey will bring to the field. We see that investment processes in Africa and global companies build their new strategies on African start-ups and African SMEs. Google Africa has set aside $1 billion in funding for the digital transformation of Startups. The fact that the growing and developing African internet economy will reach 180 billion dollars by 2025 has a great share in the process that led Google to allocate this large fund.

According to the African Private Equity and Venture Capital Association, African Start Up investment value reached $3.5 billion in the first six months this year. This figure has increased by more than 200% compared to the same period of the previous year. One of the most important points is that 27% of these start-ups were created by female founders. It is estimated that this figure will reach 7 billion dollars in the near future.

Africa's progress towards a single common market is not limited to these, the AfcFTA Secretariat signed a memorandum of understanding with McDan Group at the trade ministers meeting held last week. McDan Group will offer logistics services that will contribute to free trade between African countries with its newly purchased cargo planes and maritime merchant ships.

In the light of all these developments, Turkey can make its strategic move in this chess by driving its SMEs to the field. We must take real steps to catch up with the demand developed by the increasing population and to build the future with African SMEs. We need to forget that Germany has increased its population by only 6% in 50 years, and that Nigeria has almost quadrupled its population in this period, and we need to analyze where the demand will shift.

So what's the solution?

When growing and developing African SMEs look for suppliers, we must design systems that will find Turkish SMEs right next to them. We have to establish common warehouse systems and export development centers for SMEs by choosing strategic regions in Africa. SME export centers and common warehouse systems that can be established in strategic countries such as Ivory Coast, Ghana, Nigeria, Ethiopia can be logistics supply bases that feed many different countries neighboring these countries.

In fact, the solution is not that difficult. By establishing a logistics center (it doesn't have to be very large at first) to support Turkish SMEs, 1 shelf is rented for each SME member, each SME puts samples and catalogs on this shelf and, if desired, can stock up on this amount. can be located in the centre. This center, which is promoted through the internet, press and field studies, will be open to the visit of every African SME who wants to supply from Turkey and develop business with Turkey. can examine, create a product basket thanks to the software to be designed. It can organize an online meeting at the logistics center with the Turkish partner it has chosen, so that Turkish SMEs are constantly represented in the field and African SMEs find a constant interlocutor at the point of finding a partner from Turkey. This system will also facilitate the hand of our Trade Consultants in the field and will support strong representation. With such solutions, it is very likely that we will be the first choice of African SMEs who realize Turkish SMEs and their flexible and fast supply chain adaptation in the field. In order not to miss this great opportunity, we have to prepare an African SME themed strategic action plan. One Africa is even closer than we thought…