African leaders launch talks on ‘Cape to Cairo’ trade bloc
African leaders launched talks Sunday to create the continent's biggest free-trade bloc, a $875 billion (597 billion euros) market that would boost the region's economic profile.
The so-called “Grand” Free Trade Area would cross 26 countries, stretching from Cape Town to Cairo, with a combined population of 700 million people.
“We meet fully conscious of the collective responsibility we bear towards Africa’s founding fathers to create a single continental market of real economic value,” said South Africa’s President Jacob Zuma during the opening.
The proposed free trade area (FTA) would join three existing, and sometimes overlapping, blocs.
But each has different rules, with some countries belonging to more than one grouping, further complicating efforts to streamline trade.
The idea to unite these blocs was endorsed at a 2008 summit. It would bring together the continent’s most developed economies of South Africa and Egypt and some of its most energetic, such as Angola and Ethiopia.
“Programmes are being developed involving all three regional economic communities, together with member states, taking us a step further towards the establishment of the envisaged tripartite free trade area,” said Zuma.
But the pact faces immense hurdles: tariff barriers, poor infrastructure, weak supply chains, and economies often largely reliant on natural resources rather than manufactured products.
The three existing free trade areas — of which the EAC is the most advanced — have failed to meet intra-trade targets despite removing the bulk of trade tariffs.
And the bloc includes countries hit by conflicts, coups and political turmoil, such as Libya, Madagascar, Sudan and Zimbabwe.
New World Bank research says trade within southern African accounts for just 10 percent of the total in the region — compared to 60 percent in Europe and 40 percent in North America.
Southern African Development Community (SADC) exports increased from 20 to more than 30 percent of combined GDP over the past decade, but regional trade made up a mere three percent of the increase.
Stumbling blocks include border crossings and non-tariff barriers such as import bans and permits that cut into competitiveness.
South African grocery chain giant Shoprite for example suffers losses of $500 a day for each truck delayed at border posts.
As the 19 members of the Common Market for Eastern and Southern Africa (COMESA) join the other two blocs on Sunday, the aim is to work towards combining small domestic markets into a larger, more effective force.
Swaziland’s King Mswati III, who is the chair of COMESA and whose country is battling a fiscal crisis, said time had come for the existing blocs to work together.
“The integration of various regional blocs would no doubt improve trade within the African economies. This cannot be achieved overnight, it could only be done in phases, as there is a lot of work that still needs to be done,” said Mswati.