Plans For Africa Trade Bloc On Course

African Union Commission during a meeting in Addis Ababa, Ethiopia. The questions of the growing conflict between Sudan and South Sudan as well as the coups in Guinea-Bissau and Mali were points of discussion., a photo by Pan-African News Wire File Photos on Flickr.

Plans for Africa trade bloc on course

Tuesday, 22 May 2012 00:00

PLANS to create a 26-nation free trade area by integrating three existing African trade blocs by July 2014 are on track and the only major sticking point is likely to be harmonising rules of origin, the three blocs have said.

In recent interviews with Reuters news agency, the East African Community, the Common Market for Eastern and Southern Africa, and the Southern African Development Community said they aim to create a free market of 525 million people with an output of US$1 trillion when they unite.

Although African economies are growing fast — second only to Asia — the continent has attracted criticism over its slow pace of integration.

The delay is viewed as driving up the cost of doing business in the region.

Comesa secretary-general Mr Sindiso Ngwenya said tough negotiations on rules aimed at making cross-border trade easy for firms and small traders lie ahead.

“The major challenge for the tripartite FTA negotiations will be rules of origin,” he said.

“Whereas Comesa and the EAC have identical rules of origin, Sadc has different rules of origin. So, we have to engager them.”

The World Bank said in a report in February that red tape and trade barriers were costing Africa billions of dollars and depriving the region of new sources of economic growth.

But Mr Ngwenya said the process would move quickly because of the experience gained in building the existing trade blocs.

“For us, there is nothing new in this FTA (free trade area) because it is something that is already there,” he said.

“The timetable agreed upon is not only realistic but also feasible. Some of us can even argue that we could even move the process faster in terms of launching that FTA.”

Many of the countries in the three blocs are members of more than one trade area.

Zimbabwe and Zambia are members of Sadc and Comesa, for example, while Kenya has membership in EAC and Comesa.

“That is the beauty. We have now turned multiple membership that was termed as waste and duplication into an opportunity,” Mr Ngwenya said.

He said South Sudan, which attained independence from Sudan last year, was expected to join the free trade area, taking the total number of states to 27, or half of Africa.

Once the integration process was complete, Mr Ngwenya said he expected to see more multinational companies created.

He cited the example of Bidco, a Kenyan edible oils and soap manufacturer which, through Comesa, has operations in 15 nations.

"They (firms like Bidco) have moved away from being national champions to regional champions and ultimately, they will become multinational companies," he said.

EAC secretary-general Richard Sezibera, said regional integration had led to a doubling in trade among EAC states after its member states entered a customs union in 2005.