Africa made headlines globally on March 21st, 2018 when forty-four African countries signed the CFTA at Kigali, Rwanda. The continent received numerous positive commendations from within and outside its shores. The CFTA was a decision adopted at the 18th Ordinary Session of the Assembly of Heads of State and Governments of the African Union held in Addis Ababa, Ethiopia in January 2012. This agreement went into force on May 30th 2019, and the operational phase began at the dawn of July 7th, 2019 summit in Niamey, Niger. The CFTA is indeed commendable, because it is the largest free-trade agreement in terms of participating countries, only second to the World Trade Organization (WTO).
This agreement is primarily publicized as a tool to unify the continent and boost intra-African trade, which will in turn provide employment opportunities thereby creating wealth for Africans; the United Nations Economic Commission for Africa estimates that this will boost intra-African trade by fifty-two percent (52%) by the year 2022, and currently intra-African trade is thirteen percent (13%) according to the African Union.
Ambitious agreements such as this, is historically a media jamboree, particularly its publicity to unify Africa and intra-African trade to offset part of what African countries trade with other continents. Example, the East African Community (EAC) was founded with the mission “to widen and deepen Economic, Political, Social and Cultural integration in order to improve the quality of life of the people of Eastern Africa”, The EAC was established to boost regional free-trade and integration. Its member states are Kenya, Burundi, Uganda, Tanzania, Rwanda, and South Sudan. But after nineteen years of existence; how important is the EAC in regard to the economic situation of the region? What is the situation report in terms of integration and regional trade?
The Southern African Development Community (SADC) established in 1980 with the mission “to promote sustainable and equitable economic growth and socio-economic development through efficient, productive systems, deeper co-operation and integration, good governance, and durable peace and security; so that the region emerges as a competitive and effective player in international relations and the world economy”, and with the objectives to achieve economic development, peace and security, alleviate poverty, and enhance the standard and quality of life. SADC was also established to boost regional free-trade and integration. Its member countries are Tanzania, Zambia, Zimbabwe, Angola, Botswana, Comoros, Democratic Republic of the Congo, South Africa, Seychelles, Namibia, Swaziland(Eswatini), Lesotho, Madagascar, Malawi, Mauritius, and Mozambique. After 39 years of existence, what is the situation report in the region? What are the factual gains of the SADC since its establishment in integration and free-trade?
In light of the above, it applies to the Economic Community of West African States (ECOWAS), Common Market for Eastern and Southern Africa (COMESA), and the African Union (AU).
Secondly, in view of intra-African trade to offset part of what African countries trade with other continents. It is another media party, because what African countries trade with other continents is currently near impossible to trade it within Africa. What Africa trade outside are products of the extractive industry. Example, Angola, Cameroon, and Nigeria’s major export trade in value are crude petroleum and gas, and these products are exported mostly to North America, Europe, and Asia. Zambia, Botswana, Tanzania, South Africa, Ghana, and Namibia’s major export trade in value are copper, Gold, and Diamonds and it is exported mostly to Europe, Asia, and North America.
Thus, if these products are to be traded within Africa, where is the market? How many companies are in the continent capable to refine these products? How many companies are being licensed for operation to have these products as their raw materials for production? Are there investments with a view to build such companies within the continent? If there is, how many?
In import trade, Kenya, Ivory Coast, Democratic Republic of the Congo, Tanzania, and Niger’s major imports in value are refined petroleum, and packaged medicaments, and these products are mostly from Asia, and Europe. Ethiopia, Nigeria, Ghana, South Africa, and Angola’s major imports in value are ships, cars, planes, helicopters, machinery, delivery trucks, and refined petroleum, and these products are mostly from Asia, Europe, North and South America.
If these products are to be traded within Africa, where are the suppliers? How many companies are currently in the continent capable of supplying these products? How many companies are being licensed for operation to supply these products to meet the demands? Are there investments with a view to build such companies within the continent? If there is, how many?
Thirdly, it is undeniable that the continent is poor, which means consumers are poor. And if consumers are poor, the market is unprofitable even with a very large market size. African leaders famously cite the size of the African market as one basic reason for this ambitious agreement. They forget most of the consumers are extremely poor hence, purchasing in the continent is low. And if there is no profit, what is the essence of investment?
From the forgoing, the CFTA might be a brilliant initiative in a wrong time. Instead of this agreement that emancipated from the African Union, the union could have instituted an independent advisory and supervisory body of economic professionals, tasked to formulated and supervise policies peculiar to every African country with a view to improve the economic fortunes of every member state. Then, if the standard of living keeps improving across the continent, initiatives such as this could be considered.
References
//au.int/en/ti/cfta/about viewed on 2nd August, 2019.
//en.m.wikipedia.org/wiki/African_Continental_Free_Trade_Area viewed on 2nd August, 2019.