African leaders make pact on trade bloc
Johannesburg - African leaders on Sunday signed an agreement
to launch talks on the continent’s biggest free-trade bloc, a $875bn market seeking to boost the region’s
The so-called “grand” free trade area would cross 26
countries, stretching from Cape Town to Cairo, with a combined population of
700 million people.
“We meet fully conscious of the collective responsibility we
bear towards Africa’s founding fathers to create a single continental market of
real economic value,” said President President Jacob Zuma during the opening.
The proposed free trade area (FTA) would join three
existing, and sometimes overlapping, blocs to maximise Africa’s budding
economic prospects. The International Monetary Fund expects Africa to grow
faster than the global average in the coming years.
Six of the world’s 10 fastest-growing economies were on the
continent last year. But each of the current trade blocs has different rules,
with some countries belonging to more than one grouping, complicating efforts
to streamline trade.
The new FTA would bring together the continent’s most
developed economies of South Africa and Egypt and some of its most energetic,
such as Angola and Ethiopia.
“This tripartite is blazing a path to be followed by other
regions in Africa in realising the dream of a united Africa,” said Sindiso
Ngwenya, general secretary of the Common Market for Eastern and Southern Africa
Ngwenya said the combined gross domestic product (GDP) of
the 26 countries was expected to reach one trillion dollars in the next two
“There are a number of areas where, by building on the work
already done by member and partner states, working regionally, we can expect
quick wins,” he said.
Hurdles to overcome
But the pact faces immense hurdles: tariff barriers, poor
infrastructure, weak supply chains, and economies often largely reliant on
natural resources rather than manufactured products.
The three existing free trade areas - of which the
five-member East African Community (EAC) is the most advanced - have failed to
meet intra-trade targets despite removing the bulk of trade tariffs.
And the bloc includes countries hit by conflicts, coups and
political turmoil, such as Libya, Madagascar, Sudan and Zimbabwe.
New World Bank research says trade within southern African
accounts for just 10% of the total in the region - compared to 60% in Europe
and 40% in North America.
Southern African Development Community (SADC) exports
increased from 20% to more than 30% of combined GDP over the past decade, but
regional trade made up a mere 3% of the increase.
As the 19-member Comesa join the other two blocs, the aim is
to work towards combining small domestic markets into a larger, more effective
force, said Swaziland’s King Mswati III, the COMESA chair.
“The integration of various regional blocs would no doubt
improve trade within the African economies. This cannot be achieved overnight,
it could only be done in phases, as there is a lot of work that still needs to
be done,” said Mswati.
Donors have also been pressing Africa to lift trade
barriers, seeing increased business on the continent as a way to alleviate
poverty, a theme that US Secretary of State Hillary Clinton raised during trade
talks on Friday in Zambia.
“Ultimately, it is up to the leaders of this region to
decide if you want economic integration,” she said.
“It does mean you will have to take on entrenched interests
and respond to concerns about new competition” while making clear to their
peoples how they will benefit from expanded regional trade, she said.
Born To Fish
You can just smell the corruption
Sounds promising lets hope it happens
Funny how when Rhodes had this vision our pastoral brothers saw this as colonialism - today it is seen as opening up new african dialogue - stranger than strange
A laudable pipe dream - lets see where we are in 3 years.
SADC never really came off the ground despite funds poured into the secretariat by the US. They eventually gave it up as a bad job. Any bets that this will be any more than another gravy train?