African Free Trade Area. Great Bets and Challenges Politics and Economy -

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Although Africa is predicted for the period between 2019 and 2020 with a growth rate of 3.6 percent and that the fastest growing economies in the world are on the continent, there is much work to be done. Africa remains hostage to raw materials and agricultural exports, investment materials and food products are mostly imported from outside the continent.

In this context, the African Union launched the "practical phase" of the continental free trade zone during its last summit in Niamey, after this important project for the liberalization of Africa's economy helped support Nigeria, the continent's largest economic power. However, observers note that despite the launch of the ambitious project, protracted and protracted negotiations are still under way to implement the plan, which could include 55 countries and 1.2 billion people and a GDP of more than $ 2.5 trillion.

"A timetable must be set so that everyone can play its role in preparing for the market, and we have therefore recommended that the date be July 1, 2020," AU Commissioner for Trade and Industry Albert Moushanga said. But he added: "This is not final. The summit still has to consider the recommendation … the trade ministers agreed, and therefore the heads of state can also be expected to logically agree."

At the recent summit, Ghana was announced as the seat of the business district in the future and discussions were held on how the bloc would work. However, Trudy Hartzenberg, director of the Tralak Legal Center in South Africa, noted that "negotiations on some critical points have not yet been completed," noting that among these are the projected tariff reduction schedule in mid-2020 and the rules governing the classification of goods on It is made in Africa as well as the laws of competition between countries and mechanisms of arbitration in disputes.

The free trade zone aims to encourage trade among the continent's countries, attract investors and allow African countries to get out of their dependence on the extraction of raw materials.

Niger Treffen der afrikanischen Union in Niamey - Muhammadu Buhari (Getty Images / AFP / I. Sanogo)

Mohammedo Bukhari, President of Nigeria, signs the Free Trade Area Agreement

Challenges that may hamper the success of the project

The African Union expects the project to increase trade flows between their countries by up to 60 percent by 2022, while project opponents point to the lack of integration of African economies and fear that some small agricultural and industrial producers will be affected by the influx of low-priced imported goods.

Currently, only 16 percent of African countries trade with each other, mainly within economic blocs such as the Southern African Development Community (SADC), the West African Economic Community (CIDIA) and the East African Community (ECA), by comparison, 65 percent of the European countries' "Africa is doing business with the rest of the world, but not with itself," says Jackie Sellers of the Institute for Security Studies. "A free trade zone is almost a precondition for manufacturing."

The success of the project depends to a large extent on the removal of "non-tax" obstacles such as corruption, sluggish infrastructure and the waiting period on the border, which the "Free Trade Area" Work on it.

The IMF said in a report in April that "improving commercial logistics, such as customs services, and resolving the problem of poor infrastructure could be four times more effective than reducing tariffs to promote trade."

For her part, Elissa Gobson of the International Crisis Group pointed out that "the free-trade agreement between Canada and the European Union was negotiated over seven years, although it was a country on the one hand, and a relatively homogenous group of 28 countries on the other, Very uneven levels of economic growth. " "It will take about a decade for the positive effects to emerge," she said.

Niger Treffen der afrikanischen Union in Niamey (AFP / I Sanogo)

Group photo of the participants of the African Union summit in Niamey, Niger

Domestic industries at risk

Although 52 countries have signed the zone-building agreement since the project was launched in July 2018, it was not possible to start implementation until at least 22 countries ratified it. This number has been surpassed with 25 signatories, including many major countries such as South Africa, Egypt, Kenya and Ethiopia. However, until recently Nigeria had a population of 190 million.

Nigeria, whose economy is mainly based on oil exports, has encouraged initial talks on the project at the turn of the millennium. But the protectionist approach has overshadowed openness, in particular with the significant downturn in 2016 and 2017.

Critics of the project in Nigeria fear that local industries that suffer from very high structural costs (lack of infrastructure, power cuts, rents, etc.) will be affected by heavy import movement. Member States will be able to protect some sectors from a rapid tariff reduction.

The aim of the first phase is to eliminate customs duties for 90 percent of the goods, while the fees are canceled for 7 percent of the remaining goods at a longer stage for each country to determine. The remaining 3 percent of the goods are not charged. "We can imagine that a country like South Africa will try to protect sectors such as textiles and cars, which are very important sectors of its economy," Hartzenberg said.

The commercial zone will be operational from 1 July 2020, allowing Member States to adapt to changes that occur. The African Union estimates that the agreement will boost intra-continent trade by 60 percent by 2022. Currently, intra-African trade is 16 percent, compared with 65 percent for European countries.

M.S.

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