Windhoek – On paper, Africa’s continental free trade area agreement exists but it is not time to pop the champagne yet.
Africa’s major economies, South Africa and Nigeria together with other nine countries, including Namibia, are yet to sign the continental free trade area agreement (CFTA), which was signed by leaders of 44 African countries to create the world’s largest free trade bloc.
The CFTA is aimed at boosting trade among African countries with the free movement of people and goods.
And while the African Union (AU) told The Southern Times that they expect the rest of the countries to sign the agreement by this July, this appears not to be a straightforward deal.
Sources privy to deal told The Southern Times that countries like South Africa, Nigeria and Namibia are reluctant to sign because some regional trade blocs – which are essential to the success of CFTA – are characterised by countries whose economies and infrastructure are way below the required standards.
South Africa, which belongs to the Southern African Customs Union (SACU), the oldest customs union in the world, is already complaining that it does not get the revenue it deserves from SACU despite being the largest contributor, hence its scepticism in signing the CFTA.
SACU is a customs union aimed at collecting revenue from intra-SACU trade, including re-exports for member states comprising Botswana, Lesotho, Namibia, South Africa and Swaziland.
Instead, what South Africa signed is a declaration of intent to sign the actual agreement later.
Trade and Industry Minister Rob Davies told the media that South Africa would eventually sign the agreement although the country has to first iron out some details.
“The chapter on the rules of origin is an empty circuit board that needs to be populated. That’s also the concern articulated by Nigeria. The CFTA cannot become another way in which our continent is going to be flooded by extra-regional products coming in, using some vague partnership with someone in another country, with low levels of value addition,” he said at a media briefing.
While South Africa was diplomatic in its reasoning, Nigeria’s President Buhari was less diplomatic. He said on Twitter that “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.”
Namibia said it was consulting all the stakeholders before committing to anything.
Furthermore, the South African government expressed reservations over some legal and administrative issues in the agreement. That statement could throw a spanner in the works meaning that the whole continent might be forced to alter the agreement to accommodate these countries, especially the major economies.
Speaking to The Southern Times this week, AU Commissioner for Trade and Industry, Albert Muchanga, said they do not expect the agreement to be changed because of these countries.
“None of the member states that have not yet signed have expressed objections to the legal texts, as they are currently drafted. They did not express any objections when the Assembly was formally adopting the Legal Instruments. Signing on by countries that have not yet signed will not call for renegotiation of the legal texts that have already been signed by other member states,” he said.
Muchanga said the reason given by these countries is that they are still undertaking national level consultations.
The consultative process, Muchanga, says, is part of good governance since it is a critical element of deepening the democratic processes. He said they have at each and every meeting called upon member states to consult broadly on outcomes of negotiations.
“We, therefore, feel that we should give these countries time to finalise their national level consultations. We are confident that many of the remaining countries will sign on in July this year during the African Union Assembly to be held in Mauritania,” he said.
The CFTA is expected to be operational within six months.
Despite the uncertainty, the AU will get the ball rolling with the First Intra-African Trade Fair to be held in Cairo, Egypt, from December 11-17, 2018.
The fair is targeted to attract over 1,000 exhibitors, over 4,500 buyers and sellers, over 70,000 visitors as well as US$25 billion in trade deals. The fair is expected to attract exhibitors covering about 17 sectors ranging from engineering to education and training.
Furthermore, the fair will have a conference segment focused on trade, payments arrangements and development of regional value chains; among others. All African Union member states are expected to participate in the fair in addition to exhibitors, buyers and sellers and visitors from countries outside Africa.