African leaders came together in Egypt yesterday to sign a historic free-trade agreement that spans half the continent. The resulting area, called the Tripartite Free Trade Area, is set to remove tariffs and customs duties between 26 countries, primarily in Southern and East
Africa, and will fundamentally change trade in Africa. It is hoped that the agreement will come into force in 2017.
The new free-trade zone is comprised of 26 countries, from Egypt to South Africa and connects three regional trade blocs. The combined GDP of the countries involved stood at $1.2 trillion in 2014 – half the continent’s GDP – , their combined population at 626 million and the value of trade was reported as $102.6 billion.
Trade zones in the region have existed before, in the shape of the East African Community, the Southern African Development Community and the overlapping Common Market for Eastern and Southern Africa. In 2014 the three blocs traded more than $100 billion in goods and the new Tripartite Free Trade Area is set to further integrate markets. Free trade in the blocs “has resulted in major revisions in the projections of the GDP of the grand free area,” said Calestous Juma, a Kenyan professor at Harvard Kennedy School.
However, Nigeria, the largest economy in Africa has been left on the sidelines. The driving force behind another free-trade zone, the Economic Community of West African States, Nigeria has failed to reach many tangible trade agreements.
While the numbers involved are undeniably impressive, some analysts have questioned whether the new deal zone will be a success. The new zone needs to be ratified by the parliaments of each country and there is a belief that some governments will balk at the prospects of integration. Not all the participants have strong economies and not all produce substantial exports. The new deal would lead industry in these smaller economies to compete with industries from larger countries. Many analysts have also pointed out that the focus of development in Africa should be on the continent’s failing infrastructure.