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Is Africa's new free trade zone just a pipe dream?

Ludger Schadomsky
March 22, 2018

The creation of a new pan-African free trade zone is intended to pave the way for the world's largest interstate market. But there are still hurdles to be overcome, says DW's Ludger Schadomsky.

Ruanda Kigali Unterzeichnung Afrikanisches Freihandelsabkommen
Image: Getty Images/AFP/STR

Ahead of the signing ceremony for the new free trade zone CFTA, there was much speculation as to just how many heads of state and government would put their names to the document. The final total was 44 out of 55 — at first sight, not a bad quota. Just as, at first sight, a borderless, internal African market with 1.2 billion customers and a total Gross Domestic Product (GDP) of €2 billion ($2.46 billion) appears to be a pretty good idea.

At present, African companies pay more customs duties when they export to neighboring countries than when they export to Europe. And at just 16 percent Africa has the lowest internal trade volume of all the world's economic regions.  In comparison, trade volume in Europe is put at 70 percent.

On the right path

In 2015, after years of negotiations, the Tripartite Free Trade Area (TFTA) comprising the three major regional economic blocs, came into being. The Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC).  Three years later, the results are meager. Only two of the more than 20 founding members have ratified the agreement at national level. However, it can only be implemented with 14 ratifications.

In principle, the African Union, which is often dismissed as toothless, is marching in the right direction, towards the free movement of goods and people and visa freedom rather than protectionism.  But Americans can still obtain a visa on arrival at African airports more easily than many African citzens. That must change without delay if the continent's considerable trade potential is to be exploited, at least partially. 

Also, at the AU summit in Addis Abeba, after decades of negotiations, a joint African airspace was agreed, thereby realising one of the earliest goals of the Union which was founded in 1963. A joint African passport is also in circulation.

Ludger Schadomsky, head of DW's Amharic service
Ludger Schadomsky heads DW's Amharic service

Regional integration first

But the AU should take care not to leap too far ahead and rather push for greater regional integration of the continent's economic blocs which still is not functioning effectively. This was the reason given by South Africa and Nigeria — the continent's strongest economies — not to sign the CFTA agreement in Kigali. "We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods," tweeted Nigeria's President Buhari who did not even travel to the Rwandan capital. Africa's model country Botswana also did not sign.

Beyond national egoism, there are also practical objections. The continent is large but many individual economies are small and correspondingly weak. The missing or ailing infrastructure, excessive bureaucracy, endless queues at ports and borders all stand in the way of greater African interlinkage.  More than a few African governments, therefore, prefer trading partners in Asia to erratic neighbors.

The African free trade zone is a central pillar of the Vision 2063, when the AU will celebrate its centenary. There is still some time to go and at an AU summit in Mauritania in July this year, it's hoped that the stragglers can be persuaded to ratify the agreement. The CFTA can in any case only go into effect when national parliaments approve it. And there, as demonstrated by many enthusiastic declarations of intent and agreements of the past, is where the problem lies.