AFRICA – Africa’s largest free trade area, made up of half the continent’s countries, has been formed.
The decision was taken in Bujumbura, Burundi, at the weekend by ministers from 26 countries that belong to the East African Community (EAC), the Common Market for Eastern and Southern Africa (Comesa), and the Southern African Development Community (SADC).
The Grand Free Trade Area — as the new bloc will be known — will have a combined population of 625 million and about half of all African Union member states.
Its combined GDP of $1.2 trillion is about 58 per cent of Africa’s total GDP and would make the area roughly the 16th largest economy in the world, just below Mexico, and ahead of countries like Indonesia, Turkey, the Netherlands, Saudi Arabia and Switzerland.
Heads of State from the countries in the three blocs are expected to launch the expanded trade area when they meet in Egypt in December.
“The tripartite FTA offers significant opportunities for business and investment and will act as a magnet for attracting foreign direct investment,” Mr Sindiso Ngwenya, the Comesa secretary-general and head of the tripartite taskforce, said in a statement.
“The business community, in particular, will benefit from an improved and harmonised trade regime which reduces the cost of doing business as a result of elimination of overlapping trade regimes,” Mr Ngwenya added.
The move is seen as crucial to eliminating trade and tariff barriers in participating countries, as well as overlapping membership by countries in different trading blocs.
It is also a step towards the creation of a Continental Free Trade Area expected in 2017, which would bring West African and Maghreb countries into the trading bloc, undoing more than half a century of tariff and non-tariff barriers to trade across Africa.
“We have made significant progress in negotiations on trade in goods,” said Mr Chiratidzo Iris Mabuwa, Zimbabwe’s deputy minister of commerce and industry and chair of the meeting in Bujumbura.
The FTA, which is a key project of the African Union, is a first step in using regional economic blocs across the continent to jointly develop infrastructure and relax rules on the movement of goods, services, people and capital.