Barriers to regional trade could hurt African free market

Tuesday July 23 2019

A container depot in Nakawa, Kampala.

A container depot in Nakawa, Kampala. Countries are reluctant to open up their markets for trade. FILE PHOTO | NMG 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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The failure by Comesa-EAC-SADC member states to sign and ratify instruments for the creation of a tripartite free trade area (TFTA) four years after its launch points to countries’ reluctance to open up their markets.

Experts warn that this protectionism will impact the implementation of the African Continental Free Trade Area (AfCFTA).

Launched in 2015, the TFTA was meant to establish a single market for 27 African countries with a combined population of about 700 million people and a GDP in excess of $1.4 trillion.

Paramasimuv Pillay, Mauritius’s acting President, who spoke at the Comesa High Level Business Summit in Nairobi last week, said that intra-African trade has continued to be depressed because of barriers to regional trade.

He blamed partner states “who remain keen on sheltering their internal markets from external influence.”

The share of intra-Comesa trade stands at a paltry seven per cent in spite of the fact that the almost three-decade-old bloc accounts for a huge market of 630 million people.

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According to data from the Comesa Secretariat, the value of intra-Comesa exports stood at only $8 billion in 2017 with Egypt, Kenya and Uganda being the top three exporters.

Cumulatively, Africa has only exploited less than 16 per cent of intra-Africa’s trade potential largely due to trade barriers and poor transport and telecommunication connectivity on the continent.

The level of intra-Africa trade compares unfavourably with Europe where it stands at 68 per cent, North America at 37 per cent and Latin America at 20 per cent.

“It is unfortunate that most common products traded within our markets are still raw minerals and traditional commodities with little or no value addition that is undertaken in Africa, notwithstanding the fact that Africa has the largest number of young consumers in the world,” said Kenya’s President Uhuru Kenyatta.

Product diversification

He added that although this is the situation that AfCFTA will be attempting to remedy by facilitating higher product diversification and higher levels of progress in intra-Africa trade, member countries must be committed to opening their borders.

It is estimated that abolishing territorial barriers has the potential to increase intra-Africa trade by 52 per cent by 2022, and facilitate industrialisation and sustainable economic development owing to the fact that AfCFTA creates a substantial market of 1.2 billion people with a combined GDP of $3 trillion.

The Comesa conference whose theme was Powering Regional Integration through Trade” and also attended by Ugandan President Yoweri Museveni and Edgar Lungu of Zambia, aimed to address critical issues that hamper the free movement of goods, services, investments and people across the bloc.

“Our fragmented markets are too small to have meaningful economic impact. We need integration to tackle major bottlenecks that undermine efforts to move Africa out of the poverty trap,” said President Museveni.

Among the issues discussed at the forum were manufacturing competitiveness, digitization and trade facilitation, digital financial services and regional payment systems, standards and quality issues, smart and sustainable cities.

The forum was also used to launch the Comesa Source 21 Business Facilitation Handbook aimed at providing market information and trade information in order to promote cross-border trade.

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