Open to Openness

June 10, 2015

Much ado has been made about improving trade terms between Africa and the rest of the world, but too little attention has been paid to increasing trade within Africa. That could all change this week. Three African economic blocs comprising 26 African countries – the Common Market for Eastern and Southern Africa (COMESA), the South African Development Community (SADC) and the East African Community (EAC) – are coming together in Egypt to form an African Free Trade Union. A deal could be finalized as early as June 19.

With the priority placed on building infrastructure in the areas of energy, transport and telecommunications, African countries have every reason to come together and share the load.

From Cairo to Cape Town, the agreement would encompass three-fifths of Africa’s $2 trillion economy. It’s about time. While exports from Africa have tripled in the last decade, intra-African trade has remained unchanged as a percentage of overall economic activity. Africa’s intra-regional trade is in fact the lowest in the world.

The continent relies on an alphabet soup of economic zones with overlapping memberships and conflicting priorities. Perhaps a free trade area was the impetus to accomplish meaningful integration. With the priority placed on building infrastructure in the areas of energy, transport and telecommunications, African countries have every reason to come together and share the load.

Still, as the past has shown, it won’t be enough to simply announce a free trade zone. Structural economic reforms, trade facilitation and preferential market access all need to happen in parallel. And as long as discussions continue being modeled on European Union-style integration, improving trade terms could remain elusive.