Free trade zone envisioned from Egypt to South Africa, Angola to Madagascar

AP, Saturday 11 Jun 2011

Southern and eastern African countries that account for more than half the continent’s population and GDP are moving toward a free trade agreement that is as much about development as opening borders and dropping tariffs

At a summit Sunday, 26 governments will set timetables for allowing people and goods to move freely from Egypt down to South Africa and from Angola across to Madagascar. Leaders will also try to push forward infrastructure development and projects to support industry and manufacturing in the zone, with the hope of turning local entrepreneurs into regional powerhouses and attracting foreign investment.

Challenges remain, including overcoming corruption and ensuring political stability. But experts say Africa needs to come together.

The World Bank says trade among countries in sub-Saharan Africa accounts for just 10 per cent of total trade, compared to 60 per cent within Europe, 40 per cent within North America and 30 per cent within Asia. Ruth Kagia, head of World Bank operations in South Africa, said at a conference in the days before Sunday’s summit that by failing to do business with one another, Africans are missing opportunities for faster growth and more jobs.

Improving regional trade in Africa requires more than just dropping tariffs. Already, according to the World Bank, nearly 85 percent of trade is duty free among members of the Southern African Development Community, which is joining members of the Common Market for Eastern and Southern Africa and the East African Community in the planned free trade zone.

Part of the problem is that African economies built on exporting raw mineral and agricultural materials have little to trade with one another.

In addition, trade minister Rob Davies of South Africa told reporters that as a legacy of colonialism, African transport networks are designed to take goods from the heart of the continent to its coasts, which does not encourage trade between countries.

“They do not connect up the different countries,” said Davies, whose country is hosting Sunday’s summit.

Joshua Kivuva, a political scientist at the University of Nairobi, said corruption is a major impediment. Crossing Kenya — without encountering any border posts — can mean stopping at dozens of police and other roadblocks “where you have to bribe or you are delayed,” Kivuva said.

“I think those are the basic things which each country needs to sort out before they start talking about this grand integration mechanism,” he said.

He also pointed to the dominance of South Africa’s economy.

“The problem of the other East African countries or the upper part of east and central Africa is the fear that they will just be reduced to captive markets for South African goods,” Kivuva said.

The kind of violent political upheaval Egypt and Libya, both part of the zone, are currently experiencing will hobble progress as well.

Slowly, members of the proposed zone are taking steps to overcome the difficulties.

It’s common at African border points for trucks laden with goods to wait for days in line to clear customs and conduct other formalities. In the three years since the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community pledged to integrate into one free trade zone, they have been able to clear red tape at just one border crossing, between Zambia and Zimbabwe. That is along what they envision as a crucial north-south trade route.

 

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