Trade experts yesterday greeted proposals for a new free trade area (FTA) in Africa with scepticism. At the weekend, President Jacob Zuma announced talks on a 26-nation FTA, made up of three existing trading blocs, including the Southern African Development Community (SADC), of which South Africa is a member.
While the proposal is designed to stimulate intra-African trade, which now contributes only 12 percent of the continent’s global trade, many doubt it will come to fruition.
Stephen Gelb, a professor of development economics at the University of Johannesburg, said: “In Africa there is a long history of leaders signing commitments to free trade or regional integration, but when it comes to implementation nothing happens.”
Dianna Games, the vice-president of The Africa Advisory, Global Pacific and Partners, questioned the wisdom of forming “a bigger system out of three already flawed systems”.
And, she warned, unless the political will extended from the leadership right down the chain to the border posts, implementation would fail.
She warned also that there would be winners and losers and “there could be a lot of losers” unless ways were found to accommodate the smaller countries involved.
Azar Jammine, the chief economist at Econometrix, said Africa had the largest number of countries of any continent, which had proved a great disadvantage because each had its own barriers, which prevented separate economies opening into a broader market.
While the problem had its roots in colonial policies, he said fragmentation was perpetuated by governments that clung to their “empires of rules and regulations”.
Frontier Advisory chief executive Martyn Davies said: “Greater focus should be on properly integrating the SADC, where real developmental gains can be made through trade and integration before we pursue grand cross-continental agreements that will be hampered by poor infrastructural linkages.”
South Africa’s trade with the potential trading partner countries was worth about R36 billion in the first three months of the year – about 11 percent of its R318bn worth of trade with the world.
SADC has 15 members, the East African Community five and the Common Market for Eastern and Southern Africa 19, with considerable overlapping membership.
The arrangement excludes South Africa’s biggest African trading partner, Nigeria, with trade worth R6.8bn in the first three months of this year.
Of the potential free trade area members, most trade in the period was with Mozambique, R5.2bn; followed by Zimbabwe, R4.4bn; Angola, R4.3bn; Zambia, R3.9bn; the Democratic Republic of Congo and Kenya, R1.6bn; and Tanzania, R1.1bn.
With most of the countries the trade balance was positive – the exceptions being Angola, due to R3.1bn of imported mineral products, largely oil; and Mauritius due to R186 million in clothing and textile imports.
The biggest surpluses were with Zimbabwe (R3.4bn) and Zambia (R2.7bn).
Most of the trade in both directions involved resources – oil, metal ores, metals and diamonds. The exception was local exports of machinery and appliances to Zimbabwe and Zambia. - Business Report