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Momentum mounts for Continental Free Trade Area
July 30, 2017, 1:37 pm
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Realization that inequalities generated by globalization and free-trade are not being effectively addressed has fueled political rhetoric in favor of protectionism and anti-trade populism in many countries around the world.

Fortunately, this isolationism and disillusionment with global and cross-border trade has not so far affected Africa. The latest round of successful negotiations for the mammoth pan-African 'Continental Free Trade Area' (CFTA), attests to the intra-African trade revolution that has quietly been gathering steam since 2016.

A boldly ambitious endeavor, the CFTA seeks to combine the economies of 55 African states under a pan-African free trade umbrella, with a combined GDP of US$2.2 trillion and a market comprising of 1.2 billion people.

Announced in 2012 by the African Union (AU) heads of state and government, the CFTA is a flagship initiative of the AU's Agenda 2063 — the strategic framework launched in 2013 for the socio-economic transformation of the continent over the next 50 years. The CFTA aims to reduce tariffs between African countries, introduce mechanisms to address the substantial non-tariff barriers, liberalize service sectors, and facilitate cross-border trade. The CFTA is also expected to help rationalize the overlapping free trade areas that already exist within Africa.

To say that the CFTA negotiations are complex is more than just an understatement. The 55 participating countries with thousands of ethnic groups and languages between them also span a diversity of economic, demographic and geographic configurations.

Economically and demographically, they range from Nigeria, Africa's biggest economy with a GDP of $568 billion and a population of over 181 million, to its smallest economy that of Sao Tome & Principe with a GDP of $337 million and Seychelles with a population of around 97,000. The CFTA also encompasses 15 countries that are totally landlocked and six that are Small Island Developing States (SIDS). Bringing these divers economies together and finding solutions to their unique economic challenges is no easy task.

Since the first round of CFTA negotiations in February 2016, five more successful rounds of talks have taken place in various African capitals. The success of these negotiations is all the more encouraging given Africa’s unenviable record of unsuccessful trade deals, both on the regional and international level.

The latest round of CFTA negotiations that were held in Niger saw the modalities for trade in goods and services being ironed out. The talks in Niger also announced the members’ ambitious intention to liberalize 90 percent of tariff lines and establish a review mechanism to gradually lift this even further. With the intention to finish negotiations by the end of this year, plans are afoot to host two more negotiating rounds in the coming months to refine market access offers and the legal text of the agreement.

However, the CFTA is no panacea and the negotiators are fully aware of this. In order to derive the benefits of CFTA to the fullest, it must be accompanied by investments in infrastructure, energy and trade facilitation and should be inclusive of every African. Implementation has been a key but persistent challenge on the continent. To quote Nkosazana Dlamini-Zuma, former Chairperson of the AU Commission, "I don't think Africa is short of policies. We have to implement. That is where the problem is".

The reward of implementation would definitely be worth the effort. Africa's consumer market is the fastest growing in the world. By 2050, Africa will have a population larger than that of India and China combined. The time has come for African countries to seize the opportunities generated by the potential from such a large market.

 

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