The winds of change continue to blow across Africa, a continent that is expected to play a bigger part in global trade. Intra-African trade has long been recognized as the catalyst that could open new avenues for employment, draw investment and drive growth. Several attempts were made to exploit the realm of rich opportunities, the last one at the African Union Summit in January 2012. The deal did not see the light and the dream to enhance intra-African trade and create a free-trade area remained distant.
African countries since have been lagging behind in boosting intra-African trade. The average share of intra-African countries exports between 2007 and 2011 was roughly around 11 percent. Current estimates are between 10-12%.
For the first time in the history of Africa and after about 5 years of negotiation, African leaders signed a 26 nation-free trade pact. The aim of this pact is to bring into existence a common market that would cover half the nation, from Cairo to Cape Town. The pact termed as TFTA, i.e., Tripartite Free Trade Area will form a framework for preferential tariffs that will ensure unhindered flow of goods across a geographical expanse that 625 million people call home. Sealed in Egypt’s Sharm el-Sheikh is also largely dubbed as the Cape to Cairo pact. Member states from Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa) are part of the pact. Combined GDP of these countries is placed at $1 trillion. Popularly known as the three trading blocs, each one will take turns alternately to spearhead the TFTA and work towards on reducing customs duties. The focus is cutting down on tariffs by 85% percent within three years and doing away with non-tariff trade barriers like redundant paperwork.
The African parliament has about two years to authorize what is no doubt a mutually beneficial pact. This though skeptics claim is the easy part. Rolling out the pact and implement it properly will prove tough. The difficulty quotient is higher for countries that comprise inadequate institutions of law and protection of private property. Corruption continues to be rampant and several parts are engulfed in inter-tribal violence or insurgency. Further, African borders have long since been considered as barriers for trade – truck, barter and exchange including.
The TFTA does not guarantee the absence of non-tariff barriers. A high-profile economist, gave two examples to explain the same. A pharmacist based out of Botswana who seeks to import medicines from South Africa he would need the seal of approval from local bodies while adhering to regulatory standards. Another example is that of Botswana, a country that has imposed an embargo on importing chickens. This is a move to protect its chicken industry.
While the TFTA lacks a definite timeline it is still hailed as the right move, given that African leaders have long been known to oppose free trade and capitalism.