The establishment of a Continental Free Trade Area (CFTA) will boost Africa’s intra-regional trade to $34.6 billion by 2022. This was revealed in a report launched at the just-concluded African Union Summit in Addis Ababa, Ethiopia with the theme “Boosting intra-African Trade.”
The report is jointly published by the UN Economic Commission for Africa (ECA), African Union Commission (AUC) and the African Development Bank (AfDB).
The new report titled ‘Towards a Continental Free Trade Area,” is expected to shape the debate and the move towards fast-tracking the establishment of a CFTA.
The CFTA would translate into real income gains of more than $290 million, the report launched on the sidelines of the African Union Summit of Heads of States and Government stated.
The report stated that establishing the CFTA and boosting intra-African trade would “require countries to look beyond the short-term losses in tariff revenue and commit huge financial resources to eliminating trade facilitation bottlenecks”.
It identified poor conditions in trade-related infrastructure, burdensome customs, legal procedures and lack of diverse production structures across the majority of countries as some of the major culprits behind the slow progress in boosting intra-regional trade in Africa.
According to the Director, Regional Integration and Trade Division at the ECA, Steven Karingi, the report was published against the backdrop of a surge in the establishment of new Regional Economic Communities (RECs) and a commitment to strengthening existing RECs across the continent.
He said that with the small economic and population sizes of most African countries and the current global financial and economic environment; regional integration has become a formidable instrument for sustaining the current economic growth trends across Africa.
“The ground-breaking tripartite initiative established by SADC, COMESA and the EAC is an encouraging sign – it is a springboard for achieving the CFTA with its sizable population of half a billion people, with a combined GDP of $630 billion,” he said.
Karingi said the initiative is expected to have a domino effect and drive Africa closer towards the CFTA.
He however cautioned that success would greatly depend on the continued level of commitment to regional integration through addressing the key challenges, such as eliminating tariffs, and facilitating measures to ease customs procedures and port handling.
Speaking at the launch, Calvin Manduna, the Principal Trade Expert at AfDB said: “There is greater enthusiasm; and we are seeing tangible changes taking place on the ground as ordinary traders and the private sector creates the demand to make the CFTA a reality,” he said.
“In some RECs, citizens have the right to move freely across borders without visas and establish and invest in businesses,” he noted.
Manduna added that national and regional policies facilitated cross-border capital inflows, resulting in a six fold increase from $3.4 billion between 2000 and 2002 to $21.7 billion in 2010.
He said that with the small economic and population sizes of most African countries and the current global financial and economic environment, regional integration has become a formidable instrument for sustaining the current economic growth trends across Africa.