Trade within Africa has long faced many barriers, from the physical to nonphysical: bad roads, air routes that still favor old colonial ties to Europe, corruption and poor governance. Even as African economies have grown in the last decade, trade between African nations has lagged behind their exchanges with the rest of the world.
But African leaders meeting here this weekend are expected to start negotiations on an ambitious plan to create a continentwide free-trade zone that, perhaps years or decades from now, could foster closer economic and political ties between dozens of nations.
The negotiations, which will take place during an African Union summit meeting here, come days after officials from 26 African countries signed an agreement to create the continent’s largest free-trade zone, covering a region of more than 626 million people and a total gross domestic product of $1.2 trillion.
The new trading zone will more closely link the powerful economies of eastern and southern Africa, including South Africa, Egypt and Kenya.
The agreement, which was signed in Egypt on Wednesday and is called the Tripartite Free Trade Area, will reduce tariffs and link together three existing regional trade groups of African nations. But it fell short of its original goal of combining the three zones into a single one.
“What we are doing today represents a very important step in the history of the regional integration of Africa,” President Abdel Fattah el-Sisi of Egypt was quoted as saying at the meeting in Egypt.
The agreement still needs to be ratified by each country in the relevant areas, but it gave momentum to talks for an even bigger goal: to create a Pan-African trading zone that would encompass the continent, a dream in Africa ever since most nations achieved independence more than half a century ago.
The African Union says it will establish the zone, called the Continental Free Trade Area, by 2017 as a way to create long-term growth, investment and employment.
“There’s been talk about the continental free trade agreement for many, many years, but it’s been more like a shibboleth that shows you’re committed to regional integration on the continent,” said Christopher Wood, an expert on economic diplomacy at the South African Institute of International Affairs.
“It seems like that’s changing now,” he added. “The African Union has established negotiating principles and some outcomes and a rough timeline that seems like the continental free-trade agreement is going to move from a vision to an actual plan.”
The push toward economic integration, Mr. Wood said, comes at the end of a decade of strong economic growth on the continent driven by a worldwide boom in commodities. Instead of focusing simply on growth, African officials are now seeking to industrialize and diversify their economies as they move toward integration, he said.
Despite long-existing regional agreements, trade inside Africa makes up only about 12 percent of Africa’s total trade, according to the World Trade Organization. In the last decade, cross-border trade has increased but at a slower rate than Africa’s trade with the rest of the world.
Reducing or removing tariffs, experts say, is far less important than eliminating other barriers.
Poor roads make shipping goods costly and difficult. Railroads built during colonial days facilitate the distribution of goods not to other African countries but to ports with ships bound for Europe. Onerous visa requirements and flights that connect African countries with former colonial rulers, instead of one another, slow down the movement of people across the continent.
In addition, because few African countries have diversified economies, countries trade a limited range of goods with one another.
Fatima Acyl, the African Union’s commissioner of trade and industry, said at a news conference here that the agreement reached this week was an important step toward negotiating the broader pact.
The continental agreement would bring together 54 nations and a combined market of one billion people.
(NY Times)
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