Business Day

Road map still needed for free trade in Africa

- Prinesha Naidoo and Borges Nhamire

The efficacy of commerce under a pan-African deal to establish the largest free-trade area will probably be seen in only three years, according to an architect of the pact.

While the first trade under the African Continenta­l FreeTrade Area agreement (AfCFTA) — which could cover a market of 1.2-billion people with a combined GDP of $2.5-trillion — was set to start on July 1, it would be “very modest”, Carlos Lopes, the former executive secretary of the UN Economic Commission for Africa, said in an e-mailed response to questions.

That was because a road map, laws and support mechanisms to facilitate continentw­ide trade, had to be finalised, he said. Lopes led the unit that provided technical support to the AU, which is spearheadi­ng efforts to establish the deal.

Africa lags other regions in terms of internal trade, with intraconti­nental commerce accounting for only 15% of the total, compared with 58% in Asia and more than 70% in Europe. The African Export-Import Bank estimates intra-African trade could increase by 52% within a year of the AfCFTA’s implementa­tion and more than double during the first decade.

The agreement requires member states to work towards eliminatin­g or lowering tariffs on 90% of goods to facilitate the movement of capital and people, and create a liberalise­d market for services.

Tariff concession­s, rules of origin and protocols governing services are still to be agreed on.

An agreement on tariffs could take time because countries are expected to offer concession­s on an individual basis and the secretaria­t responsibl­e for facilitati­ng the agreement is not in place yet.

“It will take at least a year to have schedules approved by the majority of countries, unless regional blocs harmonise their offerings,” Lopes said.

“Phase two on trade in services, and later phase three on e-commerce, are even more complex,” he said.

Wamkele Mene, SA’s former chief negotiator for the deal, was appointed secretary-general of the AfCFTA at an AU Summit this month.

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