Africa eyes $34.6b intra-regional trade as continental free trade area concept in pipeline
Africa is expecting a rise in intra-regional trade of $34.6 billion in 2022, translating into real income gains of more than $290 million provided the establishment of a Continental Free Trade Area (CFTA) is achieved, according to a new report released July 17, 2012.
Published jointly by the Economic Commission for Africa (ECA), African Union Commission (AUC) and the African Development Bank (AfDB), the report, entitled “Towards a Continental Free Trade Area”, says gains from the continental free trade area can sustain Africa’s economic growth.
Director for Regional Integration and Trade Division at the ECA, Steven Karingi who gave the motive of the report explained that it was published against a backdrop of a surge in the establishment of new Regional Economic Communities (RECs) and a commitment to strengthening existing RECs across the continent.
Karingi argues that with the small economic and population sizes of most African countries and the current global financial and economic environment, “regional integration has become a formidable instrument for sustaining the current economic growth trends across Africa.”
“The ground-breaking tripartite initiative established by SADC, COMESA and the EAC is an encouraging sign – it is a springboard for achieving the CFTA with its sizable population of half a billion people, with a combined GDP of $630 billion,” he said and added that the initiative is expected to have a domino effect and drive Africa closer towards the CFTA.
The report highlights a number of challenges, including the lack of or poor conditions of trade-related infrastructure, burdensome customs and legal procedures and the lack of diverse production structures across the majority of countries.
These, says the Report, are the major culprits behind the slow progress in boosting intra-regional trade in Africa.
The report emphasized that establishing the CFTA and boosting intra-African trade would therefore “require countries to look beyond the short term losses in tariff revenue and commit huge financial resources to eliminating trade facilitation bottlenecks.”
“There is greater enthusiasm; and we are seeing tangible changes taking place on the ground as ordinary traders and the private sector create the demand to make the CFTA a reality,” said Calvin Manduna, Principal Trade Expert at the African Development Bank (AfDB) at the launch of the report in Addis Ababa.
He noted that national and regional policies facilitated cross-border capital inflows, resulting in a six fold increase from $3.4 billion between 2000 and 2002 to $21.7 billion in 2010.
Mr. Manduna cautioned, however, that success will greatly depend on continued level of commitment to regional integration through addressing the key challenges, such as eliminating tariffs, and facilitating measures to ease customs procedures and port handling.
By Ekow Quandzie