Home » Business » Africa’s FTA Gets Funding

The creation of the continent’s biggest free trade block is expected to play a significant role in Africa’s socio-economic growth and development.

PREPARATIONS for the establishment of the continent’s first free trade area (CFTA) has gathered momentum with the African Union (AU), chaired by President Robert Mugabe, mobilising US$18 million to kick start official negotiations.

The creation of the continent’s biggest free trade block is expected to play a significant role in Africa’s socio-economic growth and development.

Upon full implementation, the CFTA is expected to extensively boost intra-Africa trade and investment thereby making it easier to move goods and services around the continent.

The agreement will deal with tariff liberalisation, rules of origin, dispute resolution, customs procedures and simplification, transit procedures and non-tariff barriers.

It is also expected to include the movement of business people across the continent.

Without disclosing how much was needed for the creation of the single continent-wide market, AU Commission officials confirmed the development to the Financial Gazette’s Companies amp Markets last week, but said more funding for the project was required.

The Commission is the secretariat of the AU entrusted with executive powers.

“AU is pushing for the establishment of a continental free trade area. So far we have raised US$18 million from our partners and we hope to conclude the negotiations by 2017. This would be an important agreement for Africa,” said Batanai Chikwene, a trade policy analyst with the Commission based in Addis Ababa, Ethiopia.

He said US$18 million was mobilised from the Commission’s partners who included the European Union, German and Sweden.

The Commission director, Treasure Maphanga, weighed in saying: “We believe we have mobilised resources to start the process but we require more funding. We believe there is no reason to postpone the road map.”

She said member States were now expected to support the establishment of CFTA by making provision for resources for its negotiations.

Zimbabwe-born Chikwene and Maphanga spoke as AU customs experts met in Harare last week to discuss coordinated border management in Africa.

The meeting was organised by the Department of Trade and Industry of the AU Commission, in collaboration with the Zimbabwe Revenue Authority.

This meeting was organised pursuant to the activities in the trade facilitation cluster of the action plan for boosting intra Africa trade that was endorsed by the African Union Assembly of heads of State and government during a session in 2012 in Addis Ababa.

Compared to other regions, Africa has the lowest levels of intra-regional trade.

Currently, intra-African trade stands at 12 percent of total trade compared to 60 percent for Europe, 40 percent for North America and 30 percent for Asia.

The AU member States in 2012 at a Summit in Addis Ababa, Ethiopia, endorsed the plan to set up a CFTA by 2017.

CampM can report that two weeks ago, AU ministers of trade met in Addis Ababa to discuss strategic principles that will guide negotiations leading to the establishment of CFTA.

Now, the heads of State of the AU are scheduled to meet in South Africa next month where proposal for a detailed action plan on how to support the creation of CFTA are expected to be reviewed.

Though it’s a noble idea, this newspaper understands that lack of ratification is a matter of concern as there is a lot of politics around this issue.

Despite leaders’ endorsement of the 2012 CFTA declaration, several countries are sceptic of the move.

So far, only Mauritius is the only country out of 54 member states to have ratified the protocol, others are still weighing up their options.

Analysts said there is need for political commitment to push for border coordination so that the project can be implemented.

Compared to other regions Africa has the lowest levels of intra-regional trade.

Intra-African trade currently stands at 12 percent of total trade compared to 60 percent for Europe, 40 percent for North America and 30 percent for Asia.

African nations appear to undermine each other putting into question the future of the proposed project.

Some countries’ industry such as that in Zimbabwe is considered too weak to compete in a fully free-trade environment while others play it big.

Source : Financial Gazette

Archives