African leaders and economists have reaffirmed the need and will to set up a continent wide free trade zone.
The envisioned Continental Free Trade Area (CFTA) would allow free movement of business persons and investments. It would also avail a continental market for goods and services which would mean good business for Africa by Africans.
CFTA is a top agenda at the ongoing AU Summit in Addis Ababa, Ethiopia. The African Union (AU) and the United Nations Economic Commission for Africa (UN-ECA) have both reaffirmed the need to realize it.
Top delegates, AU Commission Chairperson Moussa Faki Mahamat and Vera Songwe, Executive secretary of the UN-ECA have cited CFTA’s potential to increase trade in the continent.
In fact, it is expected that the free trade area would more than double trade. Media from Addis Ababa reported that ECA estimated that the CFTA has the potential to boost intra-Africa trade by 53.2 percent by eliminating import duties and to double such trade if non-tariff barriers are also reduced.
However, the sought after Free Trade Area CFTA is still elusive six years after it was put on the table.
CFTA was adopted in January 2012 during the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union when it was thought that by 2017 it could very well be realized.
Experts are also concerned that because of Africa’s poor infrastructure, then even with a free trade zone across the continent, then trade would still not improve significantly., if at all.
According to the ECA, the CFTA, by reducing tariffs, simplifying trade and clearing procedures as well as reducing import duties, would make business more affordable for informal traders to operate via formal channels, which also offers more protection.
Concerns and Challenges
However, experts and organizations expressed their concern that trade on the African continent would not improve much with the current poor state of Africa’s infrastructure.
“Africa needs safe, reliable, efficient, affordable, and sustainable physical infrastructure to support economic activities and to provide basic social services, especially for the poor,” Songwe said.
AU and ECA also stressed the need to improve all aspects of infrastructure services in Africa, including road, air, energy and water, so as to help uplift intra-Africa trading.