Why Africa needs a single market

The establishment of a unified market is an essential element for African development. In this case, it entails making the African Union (AU) a single trading area in which people and companies can work, move around and establish themselves as easily as in their own national markets. This can contribute to growth, employment and the formation of an African identity through increased trade. The African union commissioner for economic affairs Dr. Maxwell Mkwezalamba said that the commercial law that is being discussed aims at revitalising the African Union area without internal borders. “We want to make the AU the most competitive trade area which will spur social and economic development,” said Mkwezalamba during a two-day African Union (AU) meeting that brought together about 50 African ministers of Justice and Attorneys General to harmonise commercial laws. “When we get a unified market, trade restrictions will have been lifted and consumers are expected to gain a lot out of it in terms of buying goods at cheaper prices”. The unified internal market involves the elimination of customs duties and the abolition of obstacles to the freedom of movement for persons, services and capital. “Both businesses and individuals benefit considerably from these advantages and consumers enjoy a more extensive range of products and services as well as more advantageous prices”, he said. For developing countries to benefit fully from a rules-based system, market openings must be available in areas where they have export potential and the capacity to supply. “Already sixteen countries from West and Central Africa have succeeded in harmonising laws in various areas such as company law, arbitration and securities, an important innovative step towards development,” explained Mkwezalamba. Emanuel Mugisha who participated in the meeting said that if the AU can achieve the elimination of export and import subsidies, traders will stand a chance to initiate better commercial deals. “If I can carry goods across across country’s border to the final market without any tax levied on them, then even final consumers stand to pay less.” Mugisha further explained that in most cases goods become unaffordable on various markets just because of those bureaucratic tendencies that traders encounter while crossing countries. “I am anxious about the development and I think it’s going to be an instrument in developing business and Africa as a continent.” He further gave an example of China where regional competition brought about by market decentralisation has been the driving force behind China’s economic development since the adoption of its market-opening reforms. “Under a free trade regime, participants secure gains from trade and specialisation.” Mkwezalamba further elaborated that if a domestic unified goods market is created, the efficiency of resource allocation for the whole country can be improved, as each region specialises in sectors where it is strongest and has a comparative advantage to trade with other regions. However, if the market is divided as it is in Africa, each country ends up making products that can essentially be imported more cheaply from a neighbouring country. Mkwezalamba added that the establishment of a unified market for goods and factors of production not only improves efficiency but also helps reduce the income gap between regions. “If restrictions on the movement of labour such as crossing border permits are removed, labour will shift from rural areas where wage levels are low to other countries and urban regions where industrialisation is in progress.” Ends