KIGALI, June 16 (Xinhua) -- Experts from the largest trading blocs in Africa are considering the adoption of a free trade agreement whose aim is to bring about a unified and liberalised single market on the continent.
Promoting continental trade area in Africa has long been a priority item for African policymakers. Over time, regional integration arrangements have thrived all over the continent.
The Tripartite Free Trade Area (TFTA), which was officially launched on June 10, 2015 in Cairo, Egypt, seeks to boost economic growth in Africa.
TFTA brings together three of Africa's major regional economic communities - the Southern African Development Community (SADC), the East African Community (EAC), and the Common Market for Eastern and Southern Africa (COMESA).
Presently only three of Africa's eight regional economic communities are participating in the TFTA. Non-participating economic blocs include the Arab Maghreb Union, the Economic Community of West African States (Ecowas), the Intergovernmental Authority on Development (IGAD) the Economic Community of Central African States (ECCAS) and the Community of Sahel-Saharan States.
While it is difficult to determine actual impact of those trade expansion efforts on regional trade flows, available data show that merchandise exports among the members of this new FTA have steadily increased from 2.3 billion U.S. dollars to 36 billion U.S. dollars between 1994 and 2014.
Speaking to Xinhua on Thursday, Dr. Frannie Leautier, senior vice-president of African Development Bank (AfDB), TFTA should focus on expanding investment in infrastructure, connectivity and production linkages in regional value chains and improving backward integration into global value chains.
"The free trade Africa will be able to build upon the recent period of significant economic growth for each of the regional economic hence boosting economy of the continent," he noted.
The TFTA is considered by regional policymakers and some analysts to be a big deal and potentially a game changer for the African trading system and the more than a half a billion citizens of African member states.
When 26 African countries signed the TFTA agreement in Cairo, under the agreement, all the 26 nations, with a combined GDP of about 1.3 trillion U.S. dollars and a population of 565 million, will merge into a common market and eliminate tariff lines and trade barriers hence economic boom among member states.
When implemented, the free trade area will constitute about half of Africa's GDP, half of its population and will cover a combined landmass of 17 million square kilometres.
"The participating TFTA countries will benefit from liberalized intra-regional trade, which is expected to boost the flow of goods and services. We expect structural transformation of African economies once free trade area is implemented," said Francois Kanimba, Rwanda minister trade and industry.
He stated that many of the participating countries in TFTA have small economies that produce few exportable goods which would mean they would have to compete with larger industries that could threaten their economies.
"This would be a healthy competition which would boost the growth of local manufacturing industries and quality of exports," he added.
Africa economists argue that the creation of a Tripartite Free Trade Area tasked with promoting economic integration in the continent is bound to reap efficiency gains to member states.
According to Mohamed Beavogui, director general of African Risk Capacity, South Africa, the scope of the TFTA economy is large, significant structural and policy bottlenecks still remain to be overcome tripartite regional blocs move ahead to implement TFTA by 2017.
"Poor infrastructure, high transaction costs and low levels of industrialization remain a big threat to TFTA. We expect member states to address the challenges ahead of final resolution. However TFTA will accelerate economies of participating countries by further stimulating intra-regional trade," he added.
TFTA is built on the three pillars of industrial development, infrastructure development and market integration which is a milestone for young African economies to tap from opportunities presented by the large economies of member states.
Following signature of the TFTA, negotiations to broaden its territorial ambit to West African nations opened on June 15, 2015 at the African Union (AU) summit in Johannesburg.
According to the AU, the ultimate aim is to establish an intra-continental market benefiting from a youthful, fast-growing population of about 1 billion and a combined GDP of 3 trillion U.S. dollars.
The overall aim of the TFTA is to remove barriers to trade and to ease the movement of people between its signatory nations. TFTA nations will now work towards agreeing and ratifying tariff rules in line with the agenda agreed at the launch of the trade bloc.
The first actions to be taken by the TFTA nations will focus primarily on market integration, above all by way of the removal of tariff and non-tariff barriers to trade, followed by a more gradual promotion of trade of services.
It seeks to promote the mobility of business people, cooperation in respect of infrastructure development, and the promotion of an equitable society and of social justice.
TFTA participating countries include, Angola, Botswana, Burundi, Comoros, DR Congo, Djibouti, Ethiopia, Eritrea, Egypt, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, Republic of Sudan, Tanzania, Uganda, Zambia, and Zimbabwe. Enditem