The words ‘Tripartite Free Trade Area’ (TFTA) were among the most commonly used phrases at the Global African Investment Summit, which closed yesterday, at the Kigali Convention Centre.
The tripartite region, launched last year in Egypt, aims at economically integrating Africa’s three major regional economic blocs – the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the East African Community (EAC).
The three economic blocs would create the largest trading bloc in Africa, comprising 26 countries, with about 620 million consumers and a combined GDP of almost $1.2 trillion.
So far, 17 countries have ratified membership to the region with the remaining nine expected to follow suit.
Experts say that realisation of the free trade area hold great potential on Africa’s development as it will promote intra-Africa trade and develop the African market.
The TFTA is expected to contribute to Africa’s development, experts citing the opportunity to open up a reliable market that spans across the continent to allow free movement of labour and services.
Rather than rely on negotiations with the West, promoters of the free trade area say that countries will be able to reduce the cost of doing business among them.
In an interview with The New Times at the sidelines of the summit, Sidiso Ngwenya, the secretary-general of COMESA, said the new bloc will have trade values worth more than $50 billion.
This, he said, will be a welcome boost in Intra-Africa trade, where he noted that most regions had significantly low levels of trade with African countries.
“For example, in COMESA, our trade from products being traded within the region stands at about $11 billion whereas products being imported to the same countries stand at about $ 90 billion. This shows that we need to change something,” he said.
Ngwenya said that to achieve sustainability the new bloc will promote three pillars; market integration, infrastructure and industrialisation.
The development comes at time African countries, including members of the East African Community, are seeking stronger trade ties with Western partners to increase their volumes of trade.
However, Ngwenya argues that rather than look for markets and trade partners outside the continent, the countries will find more value and better terms by ratifying and implementing the free trade area agreement.
The COMESA head said that the bloc will also boost the region’s competitiveness as countries will work more in a complementary nature as opposed to negative competition.
As a bloc, experts say, the region would easily attract the attention of international funding bodies to avail finances necessary for heavy infrastructure and energy projects.
Admassu Tadesse, the president and chief executive of PTA Bank, a Pan-African Bank, said implementation of the Tripartite Free Trade Area would help sustain the growth witnessed in a number of economies on the continent.
Tadesse said that a number of countries that feature in the bloc such as Rwanda, Uganda, Kenya, Ethiopia, have in recent times been listed among the most promising economies in the world.
“By working together, these countries’ economies will attract investments and partners as they have already shown commitment and growth potential,” he said.
In the negotiation process, insiders say that there is fear among countries that by being part of a larger bloc, their local industries would be stifled due to competition from imports.
However, Uganda’s President Yoweri Museveni moved to reassure countries that their local industries will not be stifled by opening up their market to fellow members of the proposed bloc.
He said that to protect their local industries, the bloc would adopt a common external tariff which will ensure that local industries in the various member countries remain competitive.