Regional blocs to form free trade zone

Forming Africa’s largest trading area has gained momentum, with leaders of three African trading blocs agreeing to create a free trade zone of 26 countries with a GDP of an estimated $624bn.
President Paul Kagame addressing the Tripartite Summit in Kampala. The high-level summit was to provide a platform for 26 African countries to discuss and make decisions on areas that enhance integration. (PPU Photo)
President Paul Kagame addressing the Tripartite Summit in Kampala. The high-level summit was to provide a platform for 26 African countries to discuss and make decisions on areas that enhance integration. (PPU Photo)

Forming Africa’s largest trading area has gained momentum, with leaders of three African trading blocs agreeing to create a free trade zone of 26 countries with a GDP of an estimated $624bn.

This decision was reached by the six heads of state from 26 countries in the Common Market Common Market for Eastern and Southern Africa (Comesa), South African Development Commission (SADC) and the East African Community (EAC).

They were attending the Tripartite Summit in the Ugandan capital, Kampala.

The deal that will ease access to markets within the region and end problems arising from the fact several countries belong to multiple groups was reached shortly after President Paul Kagame expressed faith that the summit would lead to achievable and time-bound action plans for increased collaboration, productivity, and prosperity in the three regions and beyond.

“We are gathered here in a time of considerable uncertainty in the global economy, when the implications of the crisis in the international financial markets on our continent, have yet to unfold,” he said.

The deal also aims to strengthen the bloc’s bargaining power when negotiating international deals.

Speaking to The New Times, Uhuru Kenyatta, Kenya Trade Minister and Chairman of the COMESA Council of Ministers said, “Free trade area will help mitigate challenges of multiple memberships being faced by some member states as well as pave the way for accelerated inter-regional economic integration.

“Multiple memberships will be an issue of the past because we will now have a more integrated approach. It will no longer be a challenge because all our economies will be operating under a pan –regional free trade area,” Uhuru said.

Analysts say the agreement will help intra-regional trade and boost growth.

Economic blocs
The SADC was first established as the Southern African Development Coordination Conference in 1980 in order to reduce independence on apartheid South Africa.

It was reincarnated as the SADC in 1992. It covers a population of some 248 million people and a zone whose cumulative GDP is $379bn in 2006.

The SADC’s members include South Africa, Tanzania, Zambia and Zimbabwe.

Comesa was established in 1994 and replaced the Preferential Trade Area. It includes 398 million people and the area has a combined GDP of $286.7bn in 2006. Among its members are Zimbabwe, Zambia, Uganda and Sudan.

EAC is the smallest of the group in terms of GDP, and had a GDP of $46.6bn in 2006. Set up in 1967, disagreements between founding members Uganda, Kenya and Tanzania led to its collapse.

A treaty was signed for its re-establishment in 1999 and the new EAC was formed in 2000.

Technocrats from Sadc, Comesa and the EAC attending the Tripartite Summit in Kampala have been tasked to expedite the move towards free trade area.

They were given six months in which to complete the documents required to come up with a single market.

Prudence Sebahizi, the Executive Secretary in charge of Regional Integration who is also a negotiator for Rwanda said there has been a problem of overlapping membership which has made it difficult to implement programmes and agreements.

According to Reginald Mengi, the Chairman East African Business Council, Free Trade Area is a gateway to increased intra-Africa trade that will facilitate economic development in Africa.

He also noted that creation of Free Trade Area will help Africa to address the challenges resulting from the global financial crisis.

“The current financial crisis will definitely affect trade in Africa, our exports in particular. Our exports to Europe will decline and this calls for more intra-Africa trade.

We have to look into ways of expanding our trade and not as an alternative but as a permanent way to develop our economies,” he said.

Mengi however noted that there are issues that must first be addressed.

He cited sime as  the poor infrastructure which he described as a “nightmare”, non –tariff barriers and the problem of counterfeit goods.

The agreement also will provide for consultation and exchange of information and expertise among the three economic communities (RECs), mobilisation of financial resources These were cited as crucial in implementing activities of common interest.

Some of them were  include work plans, exchange of information and capacity building.

Member states
Angola, Botswana, Burundi, Comoros, Djibouti, the Democratic Republic of Congo, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

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