Senior officials of three African economic blocs held talks on a “one trade regime” that would forge a common market spanning the continent, at a meeting in Egypt on Sunday (7 June).
The Tripartite Free Trade Area (TFTA) is to be launched at a summit of heads of state and government on Wednesday (10 June) in the Red Sea resort town of Sharm el-Sheikh, aimed at establishing a common framework for tariff preferences along with other commitments.
The deal between the East African Community (EAC), Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) would create a 26-country market with a population of 625 million and gross domestic product worth more than $1 trillion (900 billion euros).
On Sunday, senior officials from the three economic blocs held negotiations on the details of the deal in Sharm al-Sheikh.
“We are here for a historic summit… the result of this deal will be a one trade regime,” Sindiso Ngwenya, secretary general of COMESA, told reporters after an opening session.
“What we have realised is that having one trade regime is better than the costly multiple trade regimes,” said Ngwenya, who is leading the negotiations between the three blocs.
“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.”
Delegates at Sunday’s preparatory meeting of officials said the deal would substantially boost trade between the 26 countries.
“The deal essentially will facilitate free movement of goods across the 26 member countries without duties,” Peter Kiguta, director general of East African Community, told AFP.
Officials say the trade pact was almost finalised apart from some outstanding issues that were being discussed.
“Some officials have concerns about how to manage trade disputes, or how to protect small manufacturers in their own countries,” said delegate Nadir El-Rayah from Sudan.
“We are discussing how to protect these manufacturers, of course for a specific period.”
Details of the discussions will be presented at a meeting of trade ministers from member countries on Monday.
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% of African countries’ total trade is with each other — compared to some 55% in Asia and 70% in Europe.
Africa’s share of global trade stands at around three percent.
The 26 members from the three economic blocs range from relatively developed economies such as South Africa and Egypt to countries like Angola, Ethiopia and Mozambique, seen as having huge potential growth.
Analysts say that although the continent’s growth 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.
Officials say the TFTA offers significant opportunities for business and investment within the three blocs and would act as a magnet for attracting direct foreign investment in the region.
The business community, in particular, would benefit from an improved and harmonised trade regime which reduces the cost of doing business as a result of the elimination of overlapping trade regimes, officials say.
“The launching of the TFTA is the first phase of implementing a developmental regional integration strategy that places high priority on infrastructure development, industrialisation and free movement of business persons,” organisers said on the website of the June 7-10 conference.
Despite the challenges, Africa’s overall economy is expected to expand by 4.5% this year, according to a report by the Organisation for Economic Co-operation and Development, the African Development Bank and the UN Development Programme.