New ‘Cape to Cairo’ free trade pact hailed as a ‘mile­stone’ for Africa by pro­po­nents

The China Post - - WORLD BUSINESS - BY LAWRENCE BARTLETT

The launch of a free trade agree­ment by three African eco­nomic blocs in Egypt this week will be an im­por­tant step to­wards a po­ten­tially game-chang­ing com­mon mar­ket span­ning the con­ti­nent, sup­port­ers say.

The deal be­tween the East African Com­mu­nity, South­ern African Devel­op­ment Com­mu­nity and the Com­mon Mar­ket for Eastern and South­ern Africa will cre­ate a mar­ket of 26 coun­tries with a pop­u­la­tion of 625 mil­lion and gross do­mes­tic prod­uct of more than US$1 tril­lion.

The Tri­par­tite Free Trade Area (TFTA) will be in­au­gu­rated at a sum­mit of heads of state and gov­ern­ment on Wed­nes­day in Sharmel-Sheik, Egypt af­ter four years of ne­go­ti­a­tions to es­tab­lish a frame­work for tar­iff pref­er­ences and other com­mit­ments.

“The launch of the TFTA is a sig­nif­i­cant mile­stone for the African con­ti­nent,” the South African gov­ern­ment said.

“We be­lieve that this sends a pow­er­ful mes­sage that Africa is com­mit­ted to its eco­nomic in­te­gra­tion agenda and in cre­at­ing a con­ducive en­vi­ron­ment for trade and in­vest­ment.”

The move was wel­comed by busi­ness lead­ers at the World Eco­nomic Sum­mit for Africa in Cape Town last week, with par­tic­i­pants high­light­ing the fact that just 12 per­cent of African coun­tries’ to­tal trade is with each other — com­pared to some 55 per­cent in Asia and 70 per­cent in Europe.

“The tri­par­tite trade agree­ment is re­ally im­por­tant as a first step for Africa ... which then can en­gage with the Euro­pean Union and oth­ers on a global ba­sis,” Michael Rake, BT Group chair­man and a co-chair of the fo­rum, said.

Africa’s share of global trade stands at around three per­cent.

‘Sur­prise the world’

Boost­ing trade has long been an am­bi­tion of the African Union (for­merly the Or­ga­ni­za­tion of African Unity), and BACK­ERS of the lat­est move are aware of skep­ti­cism sur­round­ing its prospects.

“I think Africa will sur­prise the world,” Fa­tima Haram Acyl, the African Union’s com­mis­sioner for trade and in­dus­try, said at the WEF.

“We’re go­ing to have our con­ti­nen­tal free trade area.”

Bri­tish colo­nial­ist Ce­cil Rhodes orig­i­nally dreamt of uni­fy­ing Africa from “Cape to Cairo” in the 19th Cen­tury un­der im­pe­rial rule from Lon­don — a far cry for the di­verse group of na­tions that will make up the Tri­par­tite Free Trade Area.

Mem­ber states will range from rel­a­tively de­vel­oped economies such as South Africa and Egypt to coun­tries in­clud­ing An­gola, Ethiopia and Mozam­bique, which are seen as hav­ing huge po­ten­tial growth.

The United Na­tions Con­fer­ence on Trade and Devel­op­ment said in a 2013 re­port that one rea­son for weak in­tra-African trade is that the fo­cus has been more on the elim­i­na­tion of trade bar­ri­ers than the devel­op­ment of ca­pac­ity.

“If African gov­ern­ments want to achieve their ob­jec­tive of boost­ing in­tra-African trade, they have to cre­ate more space for the pri­vate sec­tor to play an ac­tive role in the in­te­gra­tion process,” the re­port said.

The point was sup­ported at the WEF by Jean-Louis Ekra, pres­i­dent of the African Ex­port-Im­port Bank, who em­pha­sized the need for African coun­tries to add value to their ex­ports rather than sim­ply sell com­modi­ties.

He used the ex­am­ple of two ma­jor African co­coa pro­duc­ers who would be un­able to sell co­coa to each other, but if they pro­cessed it into choco­late would be able to sell it across the con­ti­nent.

The need for the in­dus­tri­al­iza­tion of African economies was a sig­nif­i­cant is­sue at the WEF.

Del­e­gates noted that although the con­ti­nent’s growth has out­stripped global GDP ex­pan­sion by nearly three per­cent­age points over the past 15 years, it faced fall­ing com­mod­ity prices, power short­ages, po­lit­i­cal in­sta­bil­ity and cor­rup­tion.

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