Businesses lose as Africa trade blocs merger stalls
What you need to know:
Investors will have to wait longer to reach a regional market with 625 million consumers as only 16 out of 26 nations have signed an agreement to combine three trading blocs in Africa.
The Tripartite Free Trade Agreement (TFTA) was signed into effect in Cairo in June 2015, amalgamating three of Africa’s main trading blocs: the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa).
The three blocs have since 2008 been negotiating a road map to merge into a TFTA with a gross domestic product of about $1.2 trillion (Sh122 trillion).
Investors will have to wait longer to reach a regional market with 625 million consumers as only 16 out of 26 nations have signed an agreement to combine three trading blocs in Africa.
No country has yet ratified the pact, raising concern over delays in the implementation of the merger plans by the target of 2017.
The Tripartite Free Trade Agreement (TFTA) was signed into effect in Cairo in June 2015, amalgamating three of Africa’s main trading blocs: the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa).
This will create a free trade union capturing more than 60 per cent of the continent’s economic activity and investors will easily reach a market of 625 million consumers from South Africa to Egypt.
However, there has been tardy progress in implementing the deal that promises to boost the flow of goods and service.
“Since the launch of the TFTA in June 2015, 16 out of the 26 countries had signed the agreement. So far, none of the tripartite countries have ratified the agreement” the Comesa Council of Ministers said in an update following a meeting at the weekend in Zambia.
The countries that have so far signed the TFTA agreement include Kenya, Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Malawi and Namibia. Others are Seychelles, Rwanda, Sudan, Tanzania, Uganda, Swaziland and Zimbabwe.
The Comesa secretariat said national consultations on signing the TFTA were on-going in Lesotho and Seychelles while similar talks on ratification were under way in Sudan, Swaziland and Zimbabwe.
Under FTA, a designated group of countries agrees to eliminate tariffs, quotas and preferences on most — if not all — goods.
The three blocs have since 2008 been negotiating a road map to merge into a TFTA with a gross domestic product of about $1.2 trillion (Sh122 trillion).
In an attempt to expedite the merger plans, the Comesa Council of Ministers at its weekend meeting in Lusaka urged member states to confirm their tariff offers to other TFTA member states and submit their 2012 tariff books to the secretariat by April 30, 2016.
“The books should show clearly all current trade regimes they participate in and duties on products originating from TFTA countries,” the ministers said.
Reluctance by countries to fully open up their markets under the TFTA arrangement remains controversial amidst concern that some are imposing non-tariff barriers (NTBs) which frustrate merger efforts.
Apart from NTBs, negotiators involved in the merger talks have also raised concern over disparities in the level of economic development with Kenya, Egypt and South Africa being mentioned as threats to other smaller nations owing to the relatively advanced nature of their economies.
Critics said the advanced nature of the three economies could lead to polarisation of trade and investment opportunities leading to marginalisation of smaller economies participating in the same market.
However, Kenya is among countries that have already floated new proposals that could help deflect the threats posed by the disparity of economies.
