April 3, 2018

Ghana’s Private Sector Welcomes Free Trade Area Agreement

The Intra-African Connect, an organization committed to promoting and enabling Intra-African Trade and investment on Good Friday lauded the signing of the African Continental Free Trade Agreement.

The agreement commits countries to removing tariffs on 90 per cent of goods, and to liberalise services as well as create a trade bloc of 1.2 billion people with a combined Gross Domestic Product (GDP) of more than $2 trillion.

In a statement issued by Intra-African Connect, the private sector players from across the continent had engaged Heads of States, the African Union and policy makers on matters that formed the basis for the African Continental Free Trade Agreement reality.

The statement said a simple analysis of the ratios of Gross National Income (GNI) against Gross Domestic Product (GDP) show that African countries are not trading with themselves, hence not generating adequate domestic income.

According to the Intra-African Connect statement, it was unfortunate that most African Nations and governments were engaged in a negative sum game, evident by huge budget deficits, borrowing, and industrial development lag.

The statement said Africa needs a paradigm shift in its view of African economics saying “Africa’s economic principle should be Abundance and Management’ as opposed to ‘Scarcity and Choice’. Africa enjoys an abundance of resources and people”.

“It is time to put our heads together and leverage on what one African country can offer the other, and how we can effectively manage what we have within the continent,” the statement said.

The Intra-Africa Connect through trade events like the Kenya Trade Expo in Ghana, has identified challenges to Intra-Africa Trade such as free movement of goods and people, a vacuum in logistics structures to enable intra-African trade, as well as lack of access to trade financing.

Background

African leaders signed the agreement that is predicted to boost intra-African trade.

If successful, it will be the biggest trade trade agreement since the formation of the World Trade Organization in 1995.

By reducing barriers to trade, such as removing import duties and non-tariff barriers, African countries hope to boost intra-continental business.

The AfCFTA could improve trade between African countries, which in 2016 estimates stated accounted for only 10%. However, it wasn’t all forward progress.

In a set-back for the African Union, Nigeria, one of Africa’s largest economies and the most populous, declined to sign the agreement.
Commenting on Twitter, Nigeria’s President Buhari said: “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.”

South Africa, also one of Africa’s largest economies, did not sign the agreement, but President Ramaphosa stated his commitment to the agreement once the necessary legal processes were undertaken.

Albert M. Muchanga, AU commissioner for Trade and Industry, remained optimistic: “The other countries will come on board. We’re very very certain about that.”
“The Labor movement, civil society, parliamentarians. They need to reach out to everybody,” Muchanga said.

Jean-Louis Billon, VP of AfroChampions, a private sector group backing the initiative, told CNN: “There (are) too many barriers within the African continent and the only way for us to get to real development in the future is to boost trade and industry relations.”

A work in Progres

The idea of a continent-wide trade agreement has been work in progress for decades, but has accelerated in the past few years by African leaders committed to Pan-African integration.

“We started with the regional economic communities in the 70s and they were designated as the building blocks to the African economic community. Then in 1991 we had the Abuja Treaty in terms of the African economic community, with the indicative timeline of 34 years,” Muchanga told CNN.
“Then in 2012, we decided to fast track the process and that’s when it was it was decided that we should create the African Continental Free Trade Area,” Muchanga said.

The summit has been launched off the back of the Single African Air Transport Market (SAATM), unveiled in January. A total of 23 member states signed a commitment to bring air travel under a common regulatory framework.

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